JPM Follow Up

First just the charts, then the bomb.

 Staying in the Trend Channel keeps the stop process objective rather than subjective, you'll never get out at the highs, but because of the way the channel is coded, you'll get out before there's a major change in character which is often high volatility with a lot of risk associated with it, what's in the channel is easy money, after the break-very risky. Yellow arrows signify head fake moves like the new high yesterday that failed today, "From failed moves come fast moves".

 JPM intraday 5 min

  JPM's intraday charts have been going negative, but it's not that, it' the migration of that divergence across longer timeframes, this is identified pretty early so we'll see how far it goes, but it seems there was already a quiet exodus of capital before JPM was hauled in front of the government which they spent tons of money lobbying.

2 min

 3 min intraday

 Now moving to 5 min

 This is the break where it appears there was a large, quiet exodus, it's around the same time the Trend Channel was broken not only for JPM, but most market averages.

 Usually this wouldn't be my cup of tea, but I'm going to watch it. The reason why is reversals are very rarely "V" shaped, which means JPM would most likely chop around between this area and $46 or so, however they did make a big mistake using what Warren Buffet calls the "Financial Weapons of Mass Destruction", derivatives-we already saw a lot of traders/banks get their butts handed to them on derivatives in the EU.

These are the losses taken in JPM's Synthetic Credit Portfolio

 Synthetic credit products are derivatives that generate gains and losses tied to credit performance without the owner buying or selling actual debt. The losses occurred as JPM sought to unwind a portfolio of the instruments used to hedge JPM’s credit exposure.

A similar large loss was taken by another notorious investment group that was founded by 2 Noble Prize winners who won in  Economic Sciences for a new method to value derivatives, the Head of Bond Trading from Salomon Bros. , basically the all star team. Here's what happened to their returns as they tried to unwind a large position in to an unfavorable market, jut like JPM.

If you haven't read about Long Term Capital Management you must do so when you have time, this is the ultimate argument for consistent risk management.

Can JPM end up  like LTCM, an event that nearly took down the US Financial System?

They certainly have no business trading where they are.