What To Watch: Bank Earnings on the Horizon Starting Fri July 12 🌅

BY HANNAH SELNER

July 10, 2024

Earnings are firing up at the end of this week and early next. This is the most important earnings season we’ve had in the last two years, and I’m going to get into exactly why – what to look for over the next two weeks – and how we plan to leverage earnings to profit.

Let’s start with what to watch right now.

Earnings – What to Watch Right Now:

In the last year, the market is up 26%…

In the last 6 months, over 17%…

And in the last 30 days, up 4%.

If our current market was a carton of eggs at the grocery store, it’d cost $22. If the first two weeks of the earnings season are not a complete bullseye (Meaning: EVERY company beats earnings predictions pretty handily… I’m going to give you exact numbers for what “pretty handily” means for each of the bank earnings upcoming), we are going to see a correction, and perhaps a LARGE correction.

I’m talking about a 10-15% haircut OVERALL.

If we see even MORE than 50% of companies struggle with earnings, that haircut would look more like a buzz cut… 25-40%.

Understanding market conditions and lessons like this are exactly what we do here at Option Pit – and we prepare you to trade INTO them, no matter the condition. Our job is to teach you how to exploit conditions and make money, no matter what the market is doing. Up, down, sideways… doesn’t matter.

Of course we have the banks kicking us off… Here are the ones I’m keeping an eye on over the first three days (all charts are sourced from Nasdaq.com):BankMorgh

Friday, July 12:

Monday, July 15:

Tuesday, July 16:

Let’s get into significant price levels on each, and exactly what price would qualify as an earnings “miss” and could kickstart a market selloff.

Earnings – What We’re Looking For:

Remember when anything over the predicted Earnings Per Share (EPS) for a company at their earnings report was “good?” Those were the good ‘ol days!

Now, a company can “beat” earnings on paper and still drop in the days immediately following if it doesn’t hit what the market Report Card labels: Exceeds Expectations.

Let’s walk through each of the upcoming bank earnings predictions and what would qualify as Option Pit Research’s “Exceeds Expectations” to keep the market on an upward march. Think of the “OPR Exceeds Expectations” numbers below as the ACTUAL price earnings need to hit in order to keep the market moving up.

Anything below the prices below, and if we see more and more companies miss the “OPR Exceeds Expectations” levels, the closer we’ll come to a significant overall drop lower. Setting these levels – and tracking them – will help us prepare for the market reaction to come – and how we’ll trade it, to the upside OR the downside.

I even made a worksheet for you with all of the significant price levels where you can track reported EPS – DOWNLOAD IT HERE

JPM

JPM is rolling off of four earnings beats in a row by at least 14 cents.

The estimated Earnings Per Share (EPS) for Friday is $4.19. JPM needs to beat this number by 14 cents – hitting at least $4.33. If it doesn’t, this will be the first “knock” on the door of a potential market haircut.

JPM EPS Forecast = $4.19

JPM OPR “Exceeds Expectations” = $4.33 or higher

Goldman missed earnings back in Q2 of 2023, but the last three reports it has beat on all counts.

In Q1, the projected EPS was $8.54, and Goldman hit $11.58, HANDILY beating the prediction. It spiked up $28 overnight, and then proceeded to sell off $10 or so for the next 24 hours. Since then, it’s been a steady stampede higher to ATHs around $471.

It’s down around $10 the last few weeks – potentially in anticipation of earnings as some traders take profits. Goldman will need to see AT LEAST the $11.58 EPS level in order to hit “Exceeds Expectations” and allow the market to continue higher… I’d argue it’s actually closer to +$12 to keep things on track.

GS EPS Forecast = $8.70

GS OPR “Exceeds Expectations” = $12 or higher

BAC

Bank of America has had four earnings beats in the last four quarters, 3 of them by 4, 7 and 9 cents, and one by only a single cent in Q4 of 2023. This will likely be another close call.

They announced on June 28th that they plan to increase their quarterly dividend 8% to $.26 a share. The stock has climbed $2 since that announcement.

BAC will need to hit at least $.83-$.85 EPS levels on Monday in order to put the OPR Exceeds Expectations meter in the green.

BAC EPS Forecast = $.79

BAC OPR Exceeds Expectations = $.85 or higher

MS is forecasting $1.65. Exceeds Expectations meter says we need $1.90.

MS EPS Forecast = $1.65

MS OPR Exceeds Expectations = $1.90 or higher

SCHW

SCHW is forecasting $0.76. Exceeds Expectations meter says we need $0.78.

SCHW EPS Forecast = $0.76

SCHW OPR Exceeds Expectations = $.78 or higher

PNC

PNC is forecasted to hit $3.00. Exceeds Expectations meter says we need $3.18 or higher

PNC EPS Forecast = $3.00

PNC OPR Exceeds Expectations = $3.18 or higher

Earnings – How To Profit:

No matter if these earnings “hit” and we continue to march higher, or if they miss and we move lower, we have a strategy in place to profit.

It’s based on a single, little-known market “certainty,” that the SPY will move 2% in a single month.

As long as we get that 2% move, we profit. And especially when we get a BIGGER move than that, we profit.

If these earnings don’t hit… and we start to drop… this single market certainty can net us 300%, 400%, even 500% profit in a single day if the market plummets.

Learn More Here About How To Capture These Gains….