# Banks passed their stress test and are buying back billions — accumulate JPMorgan and Goldman

_AI-generated trading idea · LONG · GS, JPM_

> Canonical page: https://commonquant.ai/research/for-you/banks-passed-their-stress-test-and-are-buying-back-billions--584d1adb-ae81-4309-b700-8e340aca73d8

All major banks passed the Federal Reserve's recession stress test with flying colors. In response, JPMorgan announced a massive $50 billion stock buyback and Goldman Sachs raised its dividend.

## Idea

The Federal Reserve stress test confirmed all 32 large banks can weather a severe recession. This green light triggered immediate capital return announcements, with JPMorgan unveiling a massive $50 billion buyback program and Goldman Sachs raising its dividend. When banks get clearance to return capital, it signals regulatory confidence in their balance sheets and directly boosts shareholder value through both buybacks (reducing share count) and dividends (cash returns). This is fundamentally bullish for bank stocks.

## Advanced Analysis

### Verdict: the stress-test story is real — but the entry isn't confirmed yet

The stress-test catalyst is real and dated: per CNBC, on June 24, 2026 the Fed cleared all 32 large banks, JPMorgan unveiled a $50B buyback, and Goldman raised its dividend — and both firms are earning it, with JPM's June-quarter net income up 28.3% sequentially to $21.2B and GS swinging to +$5.6B in quarterly free cash flow from -$32.4B. Against that, the June 2026 ownership filings show net open-market insider selling of roughly -$29.3M at GS across 13 holders and -$6.6M at JPM across 22 holders, a genuine counter-signal while those filings' deadline has already passed. The completed five-year backtest produced a 53.3% return on only 7 trades with a 42.9% win rate and an 11.5% worst drawdown — a thin, lumpy sample — and GS's MACD histogram is already negative at -3.9, so an entry today inherits a live exit risk. Nothing on the entry checklist is fully confirmed: GS needs ADX (14) above 20 from 14.3, JPM needs RSI (14) above 50 from 41.5, and the volume condition cannot be evaluated. Conviction breakdown: thesis support 80, trade readiness 45, risk quality 55, backtest evidence 50, fundamentals trend 70. Wait for the setup to confirm — and weigh the next fall ownership filings before sizing beyond the minimum.

#### Conviction score breakdown

Composite score computed by the server from the applicable evidence-tier dimensions.

| Measure | Value |
| --- | ---: |
| Thesis support | 80/100 |
| Trade readiness | 45/100 |
| Risk quality | 55/100 |
| Backtest evidence | 50/100 |
| Fundamentals trend | 70/100 |
| Score | 60/100 |
| Composite Score | 60/100 |
| Evidence Tier | backtested |

#### Decision scenarios

Bull, base, and bear cases synthesized from the cited evidence tier. Likelihoods are rounded evidence-weighted judgments, not statistically calibrated forecasts.

| Measure | Value |
| --- | ---: |
| Evidence Tier | backtested |

### Trade now: not triggered — here is exactly what has to line up first

Nothing is live yet, so the honest instruction today is \*\*wait\*\* — with a precise checklist. The idea is a long JPM/GS bank-capital-rotation trade (JPM's $50B buyback, GS's dividend hike, per the idea's stress-test thesis), and the strategy's fastest entry on each name needs four conditions at once. On \*\*GS (last close $1,036.53)\*\*, RSI (14) is 52.7 and already above the required 50, but the 9-day EMA at $1,031.0 sits just below the 21-day EMA at $1,034.1 (a crossover of about $3.2 is needed), and ADX (14) at 14.3 is far from the required level above 20. On \*\*JPM (last close $353.51)\*\*, the EMA crossover is effectively in place ($356.73 vs $355.98) and ADX at 35.4 clears 20 easily, but RSI (14) is 41.5 — it must rise above 50 — and the volume-trend condition cannot currently be evaluated. The deeper support-tag entries also require a low that touches first support ($1,001.67 on GS, $350.18 on JPM) while the close holds above it.

Risk is defined mechanically, not by feel: the strategy uses a fixed-risk position size with a stop at a \*\*2.3% loss\*\* and a take-profit at a \*\*4.7% gain\*\*, roughly a 2-to-1 reward-to-risk per position, capped at 25% of the book per name. Secondary stops trigger below the second support level (GS around $977.7, JPM around $347.8 on a closing basis), and signal exits fire if RSI goes above 75 or the MACD histogram turns negative — note GS's MACD is already negative at -3.9, so a GS position would be subject to that exit almost immediately. Over the full five-year backtest the paired JPM book compounded to a 53.3% return across 7 trades with a 42.9% win rate and an 11.5% worst drawdown; the 12-month window produced a 7.7% return on 2 trades.

What "wait" means concretely: set alerts on \*\*GS — ADX (14) crossing above 20\*\* (currently 14.3) and \*\*JPM — RSI (14) crossing above 50\*\* (currently 41.5). Either one flipping, combined with the other already-met or near conditions and a confirmed OBV reading, is your actionable trigger. Chasing GS at $1,036 before the trend-strength condition confirms means taking the trade without the setup that produced the backtest's numbers — we'd rather miss the first 1–2% than enter half-armed.

#### GS price and trigger map

Uses the idea timeframe and keeps price levels on the price axis.

| Measure | Value |
| --- | ---: |
| Ticker | GS |
| Timeframe | 1d |

#### JPM price and trigger map

Uses the idea timeframe and keeps price levels on the price axis.

| Measure | Value |
| --- | ---: |
| Ticker | JPM |
| Timeframe | 1d |

### A regulatory green light backed by elite profitability

The regulatory premise is real and dated precisely: per CNBC, on June 24, 2026 the Fed's stress test cleared all 32 large banks, and JPMorgan immediately unveiled a $50 billion buyback while Goldman Sachs raised its dividend. That matters because both firms are demonstrably earning the capital they are returning. Goldman's net income climbed from $5.63B in the March 2026 quarter…

#### GS Debt to equity

Debt to equity trend from CommonQuant fundamentals/XBRL data; -12.8% from first to latest point.

| Measure | Value |
| --- | ---: |
| 2009-12-31 | \2.775801114347937 ratio |
| 2010-06-30 | \2.5871388125008465 ratio |
| 2010-09-30 | \2.6047821087275467 ratio |
| 2010-12-31 | \2.433515176586173 ratio |
| 2011-03-31 | \2.525949026480288 ratio |
| 2011-06-30 | \2.532215711205705 ratio |
| 2011-09-30 | \2.639824220979341 ratio |
| 2011-12-31 | \2.582077040026144 ratio |
| 2012-03-31 | \2.503670313721112 ratio |
| 2012-06-30 | \2.420396678333677 ratio |
| Latest Value | \2.420396678333677 ratio |
| Change Pct | \-12.803670773716377 ratio |
| Ticker | GS |
| Timeframe | reported periods |

#### GS sector percentile check

Ranks GS against 877 companies in its sector using CommonQuant fundamentals.

| Measure | Value |
| --- | ---: |
| Free cash flow | \0.6841505131128849th percentile |
| Return on equity | \45.219347581552306th percentile |
| Ticker | GS |
| Sector | Financials |
| Peer Count | 877 |

#### JPM sector percentile check

Ranks JPM against 889 companies in its sector using CommonQuant fundamentals.

| Measure | Value |
| --- | ---: |
| Return on equity | \86.50168728908886th percentile |
| Revenue growth (YoY) | \32.362459546925564th percentile |
| Ticker | JPM |
| Sector | Financials |
| Peer Count | 889 |

### Scores

- **Conviction score breakdown:** 60
- **Thesis support:** 80
- **Trade readiness:** 45
- **Risk quality:** 55
- **Backtest evidence:** 50
- **Fundamentals trend:** 70

### Watch items

- **GS — ADX (14)**
- **GS — EMA (9) vs EMA (21) crossover**
- **JPM — RSI (14)**
- **JPM — Close vs second support**
- **GS — Close vs second support**
- **GS — Insider net open-market value**
- **JPM — Dividend ex-date**

## Key details

- Symbols: GS, JPM
- Timeframes: D1
- Tags: \#banks, \#buybacks, \#dividends

## Community

- Upvotes: 17
- Views: 0
- Copies: 0
- Cosigns: 0

## News sources

- [Small caps are booming this year. Here are Wall Street's top smaller picks](https://www.cnbc.com/2026/06/25/small-caps-are-booming-this-year-here-are-wall-streets-top-picks-.html) — CNBC
- [JPMorgan Chase unveils $50 billion buyback, Goldman Sachs raises dividend after Fed stress test](https://www.cnbc.com/2026/06/24/jpmorgan-goldman-sachs-fed-stress-test.html) — CNBC

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## Related

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## About CommonQuant Research

Ideas and Advanced Analysis are generated with fresh, LLM-selected news headlines and grounded in SEC XBRL fundamentals and peer percentiles. Strategies built from these ideas are automatically backtested (over a timeframe-dependent historical window with walk-forward tuning) and stress-tested before they can go live, then monitored against the news hourly while they run.