One banking stock could be about to break out. “JPMorgan is a brand that does everything well,” Boris Schlossberg, managing director of FX strategy at BK Asset Management, said yesterday. The stock is the “Apple” of banking, he said.
“I actually love JPMorgan,” he added. It “is not the best in everything, but it does everything incredibly well from the consumer side and the corporate side.” JPMorgan is down 27% this year as bank stocks have struggled to climb back from the coronavirus sell-off. Financials are the second worst performing sector this year, but Schlossberg thinks it’s about time for bank stocks to rise.
“The banks are surely due for a bounce. Simply because they’ve just underperformed the broader market by so much that they are really relatively cheap to the rest of the market. Their underlying business is quite good,” he said.
The KBE ETF, which tracks bank performance in the S&P 500, seemed to fight off the broader sell-off Thursday before ultimately closing slightly higher. The group held up during the day after Deutsche Bank analysts said the tide was turning in favor of bank stocks. However, Schlossberg does note that bank performance also hinges on another aspect of the market.
“It really comes down to rates. The banks become truly a strong buy if we did an up move in the 10-year [Treasury] closer to 1%, but we don’t even have to do that. As long as rates stay stationary here, and just moderately move up,” he said. Craig Johnson, chief market technician at Piper Sandler, agrees that JPMorgan is the place to be.
“This is one of the best-looking companies inside the sector,” Johnson said during the same “Trading Nation” segment. “It’s been sort of consolidating coming off the March lows, kind of grinding higher, but consolidating.
A move above $105 would open the door to $110 on this stock, and we think it’s one people should be investing in at this point in time.” JPMorgan was 1.6% higher in Friday’s premarket above Thursday’s close of $101.33. Johnson also agrees rates need to turn higher before diving headfirst into the banks