Earnings Roundup: JPMorgan Chase & Co., Citigroup Inc, and Wells Fargo & Co

Bank stocks JPMorgan Chase & Co. (JPM), Citigroup Inc (C), and Wells Fargo & Co (WFC) reported earnngs this morning

by Kirra Fedyszyn

Published on Oct 14, 2016 at 10:42 AM
Updated on Oct 14, 2016 at 10:42 AM

After this week's disappointing earnings kickoff from Alcoa Inc (NYSE:AA), traders have been on edge for the next round of reports. Attention is now shifting to the banking sector, as financial stocks JPMorgan Chase & Co. (NYSE:JPM), Citigroup Inc (NYSE:C), and Wells Fargo & Co (NYSE:WFC) all released their quarterly figures this morning. Below we'll take a quick look at how the market is responding to each company's results so far.

JPM easily beat analysts' estimates for the third quarter, boosting the stock 1.1% to $68.50 -- within striking distance of a new annual peak. The shares have been sailing higher since their February low at $52.50, and have been enjoying support from the 60-day moving average in recent months. In fact, a bounce off this trendline at the end of September sent JPM on its course to Monday's 52-week high of $69.06.

Options traders are likely applauding today's price action, as long calls have been popular in the stock's options pits of late. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), JPM's 10-day call/put volume ratio of 2.15 sits just 5 percentage points from a 12-month high. There's still room for some upbeat attention from the brokerage bunch, though. At the moment, more than 40% of the analysts tracking JPMorgan Chase & Co. (NYSE:JPM) rate it a "hold" or "strong sell."

Shares of C are popping 2% to $49.44, after the company reported earnings that topped predictions on the Street -- though profits and revenue for the quarter fell on a year-over-year basis. The stock is still off 4.4% in 2016, and has run into trouble today at the round $50 level. This area has alternately served as either support or resistance in the past three years. In fact, C hasn't topped $50 on a closing basis since early January.

The analyst community is broadly in C's bullish corner, with 12 out of 17 rating the stock a "strong buy," and not a single "sell" on the books. But options traders could be sweating as the shares rally today. Specifically, near-term traders have been taking an unusually put-heavy approach toward Citigroup Inc (NYSE:C), per its Schaeffer's put/call open interest ratio (SOIR) of 1.11. Not only does this reading show puts outweighing calls among options in the front three-months' series, but it also ranks higher than 96% of all others taken in the past year.

It hasn't been a smooth road for WFC lately, so perhaps it's not shocking that the stock is lagging behind its peers -- up just 0.5% at $44.98, despite the bank beating third-quarter earnings estimates. In fact, the shares are still sitting just above last week's two-year low, and are down 17% on a year-to-date basis. Plus, today's gains have been kept in check by the overhead $45 level, which previously served as support for the stock in 2016.

Considering the company's scandal-induced technical troubles, traders have been remarkably bullish toward the stock. Short interest fell by 19% during the most recent reporting period -- though that could well be the result of bears collecting profits, rather than actually turning optimistic. Meanwhile, options traders have been upping their bullish bets on WFC, per its 10-day ISE/CBOE/PHLX call/put volume ratio of 2.28, in the 92nd annual percentile.

This confidence ahead of earnings was particularly surprising, considering Wells Fargo & Co (NYSE:WFC) had made a move to the downside in the session following its earnings reports in seven of the past eight quarters. If the stock fails to add to its gains today, an unwinding of upbeat sentiment in the options pits could spell more trouble ahead.

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