# Big banks are crushing earnings — momentum play on Goldman and Citi

_AI-generated trading idea · LONG · C, GS, MS_

> Canonical page: https://commonquant.ai/research/for-you/big-banks-are-crushing-earnings-momentum-play-on-goldman-and--847f2fee-3170-42dd-821a-1ccf10fecf40

Big banks are crushing their earnings reports thanks to strong trading desks and a surge in dealmaking. Analysts are enthusiastically backing the sector, naming Citi as a top pick and raising targets on Goldman Sachs.

## Idea

Wall Street is enjoying a massive wave of trading revenue and renewed dealmaking, allowing major banks to easily beat their profit targets. When top analysts publicly double down on a specific stock like Citigroup while others like Goldman Sachs surge to record highs, it shows deep confidence in the sector's ability to keep generating cash. As long as the banking sector holds this upward momentum, riding the strongest performers should yield steady gains.

\#\# Story development — 2026-07-17 22:19 UTC

\*\*AI trading frenzy delivers record revenue for Wall Street — load up on the mid-sized bank catching the wave\*\*

Wall Street banks are crushing earnings right now, and not just the giants. JPMorgan, Morgan Stanley, and even mid-sized PNC Financial all posted record results this week thanks to a surge in trading and deal-making. Analysts at Bank of America say the biggest bank, JPMorgan, still has further to run.

\#\# Story development — 2026-07-18 06:01 UTC

\*\*Big banks are minting money — ride the sector-wide earnings wave\*\*

JPMorgan just posted a massive 41% profit jump and its CEO says the economy is about as good as it gets. PNC also reported record revenue with a 25% profit surge, and Morgan Stanley is expected to show similar strength when it reports — big banks are having a blowout season.

## Advanced Analysis

### Verdict

The earnings case for big banks is real — Goldman's diluted EPS surged 154% year-over-year and Morgan Stanley's grew 28.4% — and the backtest on C delivered a 302% cumulative return across 18 trades over 60 months. But that same backtest reveals a punishing reality: only 38.9% of trades were winners, the maximum drawdown was 33.4%, and the equity curve sat at -48% in mid-2022 before recovering. Today, none of the three target names have all entry conditions aligned, with GS closest but still needing its 50-day SMA to climb above price or a pullback to resolve the gap. The configured baseline setup was confirmed through walk-forward validation on a final untouched holdout, making it the recommended parameter set. This is a trend-following system that requires iron discipline to hold through deep drawdowns while waiting for occasional large winners to carry the portfolio.

\*\*Conviction breakdown:\*\*
\- \*\*Thesis support (58):\*\* The idea's narrative about trading revenue and dealmaking is well-supported by EPS growth, and analyst endorsements from Wells Fargo's Mike Mayo (per Bloomberg) and raised GS targets (per CNBC) add conviction — but Citigroup's 5.6% revenue growth landing in only the 30th percentile of peers and negative free cash flow at both C (-$74.2B) and GS (-$47.2B) temper enthusiasm.
\- \*\*Trade readiness (25):\*\* No entry conditions are currently met across C, GS, or MS; C's 10-day ROC is -8.4% and its 50-day SMA sits $12.50 below price, while GS needs either a pullback or SMA catch-up before its setup can complete.
\- \*\*Risk quality (35):\*\* The tight 2.4% stop produces frequent small losses and the 33.4% historical drawdown tested -48% at its worst point, with MS leverage at 3.06 — its highest since 2009 — adding balance-sheet risk.
\- \*\*Backtest evidence (62):\*\* The 60-month C pair returned 302% with walk-forward validation producing a positive median fold return of 6.6% and a final holdout gain of 6.98%, but the sub-39% win rate and single-winner-dependent holdout performance raise durability questions.
\- \*\*Fundamentals trend (55):\*\* GS and MS both sit in the top quartile for ROE at the 81st and 84th percentiles respectively, yet C's 0th-percentile free cash flow and 40th-percentile ROE make it the weak link in the basket.

#### Conviction score breakdown

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

| Measure | Value |
| --- | ---: |
| Thesis support | 58/100 |
| Trade readiness | 25/100 |
| Risk quality | 35/100 |
| Backtest evidence | 62/100 |
| Fundamentals trend | 55/100 |
| Score | 47/100 |
| Composite Score | 47/100 |
| Evidence Tier | backtested |

### Trade now

The strategy is \*\*not ready to enter today\*\*. None of the three target names — C, GS, or MS — have all their entry conditions met simultaneously, so the correct action is to wait.

For \*\*Citigroup (C)\*\*, trading at $131.71, the momentum and trend conditions are the main blockers. The 50-day simple moving average sits at $119.21 — roughly $12.50 below the current price — and the rule requires the SMA (50) to be above price, not below. The 10-day rate of change is negative at -8.4%, far from the zero line it needs to cross above. RSI (14) at 43.9 does satisfy the above-40 condition, and ADX at 19.1 is close to the 20 threshold but not quite there. The nearest support level is $120.00.

\*\*Goldman Sachs (GS)\*\* at $1,119.14 is the most promising of the three on an indicator basis: RSI at 60.1 and ADX at 28.5 both clear their thresholds, and the 10-day ROC is positive at 6.1%. However, the 50-day SMA at $1,033.86 is roughly $85 below price, failing the same trend filter as C. The SMA-above-price condition is inverted from what the rule needs.

The hard stop for any position taken under this strategy is a \*\*2.4% loss\*\* (the fixed stop in the exit rules), with a take-profit at \*\*4.8%\*\*, yielding an effective reward-to-risk of roughly \*\*2:1\*\*. "Wait" means: do not initiate positions until price pulls back enough that the 50-day SMA sits above the closing price on the same bar where the 10-day rate of change crosses above zero. That is the specific alignment the rules demand, and it has not occurred.

#### C price and trigger map

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

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

#### GS price and trigger map

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

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

#### MS price and trigger map

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

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

### Earnings momentum and analyst conviction are real — the numbers back them up

The thesis rests on Wall Street's trading and dealmaking engine firing on all cylinders, and the earnings data delivers. Goldman Sachs posted diluted EPS of $51.32 for the fiscal year — a staggering 154% jump year-over-year — while Morgan Stanley grew EPS 28.4% to $10.21. Citigroup trailed but still delivered a respectable 17.7% EPS increase to $6.99. These are not marginal beats; they represent a structural shift in profitability that the idea…

#### C Free cash flow

Free cash flow trend from CommonQuant fundamentals/XBRL data; +146.5% from first to latest point.

| Measure | Value |
| --- | ---: |
| 2007-12-31 | $-75554000000 |
| 2008-09-30 | $96835000000 |
| 2008-12-31 | $93906000000 |
| 2009-03-31 | $-8663000000 |
| 2009-06-30 | $-21042000000 |
| 2009-09-30 | $-14381000000 |
| 2009-12-31 | $-56874000000 |
| 2010-03-31 | $35140000000 |
| Latest Value | $35140000000 |
| Change Pct | $146.50978108372817 |
| Ticker | C |
| Timeframe | reported periods |

#### C sector percentile check

Ranks C against 622 companies in its sector using CommonQuant fundamentals.

| Measure | Value |
| --- | ---: |
| Free cash flow | 0th percentile |
| Revenue growth (YoY) | \29.694323144104807th percentile |
| Return on equity | \39.87421383647799th percentile |
| Ticker | C |
| Sector | Financials |
| Peer Count | 622 |

#### GS sector percentile check

Ranks GS against 622 companies in its sector using CommonQuant fundamentals.

| Measure | Value |
| --- | ---: |
| Free cash flow | 0th percentile |
| Return on equity | \81.13207547169812th percentile |
| Ticker | GS |
| Sector | Financials |
| Peer Count | 622 |

### Scores

- **Conviction score breakdown:** 47
- **Thesis support:** 58
- **Trade readiness:** 25
- **Risk quality:** 35
- **Backtest evidence:** 62
- **Fundamentals trend:** 55

### Watch items

- **C — SMA (50) vs Price**
- **C — ROC (10)**
- **C — ADX (14)**
- **GS — SMA (50) vs Price**
- **MS — ADX (14)**
- **MS — RSI (14)**
- **C — RSI (14)**
- **C — SMA (50) above Price**
- **C — ROC (10) crossed above 0**
- **C — RSI (14) above 40**
- **C — ADX (14) above 20**

## Key details

- Symbols: C, GS, MS
- Timeframes: D1
- Tags: \#banks, \#financials, \#earnings\_beat, \#momentum

## Community

- Upvotes: 27
- Views: 370
- Copies: 0
- Cosigns: 0

## News sources

- [AI stock frenzy drives record revenue at Morgan Stanley, capping big bank earnings blowout](https://finance.yahoo.com/markets/article/ai-stock-frenzy-drives-record-revenue-at-morgan-stanley-capping-big-bank-earnings-blowout-122105807.html) — Yahoo Finance
- [Wells Fargo’s Mike Mayo: Citi My Top Pick of Big Banks](https://www.bloomberg.com/news/videos/2026-07-13/wells-fargo-s-mike-mayo-citi-my-top-pick-of-big-banks-video) — Bloomberg
- [JPMorgan Chase has more upside ahead after its blockbuster earnings report, says Bank of America](https://www.cnbc.com/2026/07/16/jpm-has-more-upside-ahead-after-its-blockbuster-earnings-report-says-bank-of-america.html) — CNBC
- [PNC Financial posts record quarterly revenue on capital markets windfall, FirstBank buy - Reuters](https://news.google.com/rss/articles/CBMi0AFBVV95cUxQVjJUdUc4eVA4Vm9LdXNGTW04WUpmWlZDQjB1V3piNzRaOGJHd2R6dzFWdU1HMGxKcDVOem04ZFZ1Tl9rUkNsbzQyMW12NFBZeVVwWVVaX2RvZDVaYmZ3bFd2UzJqR1RVcWNxdkpqZHY3Y1hkbExublFmSUE5TzVNNjd4ZDNCSDBrTkJZX0JxZnZzT0djdTJKOHMyR3J5Tk1TR2kxZFR0QUl5VTJObW94NVdPRzJFc3dhYlFyMGRQYU1uVEI5MzJaS0xER2pqTDVv?oc=5) — Google News / Reuters
- [JPMorgan Just Reported $21.2 Billion in Q2 Net Income -- Up 41% -- and CEO Jamie Dimon Said the Economy Is "Close to as Good as It Gets."](https://finance.yahoo.com/markets/stocks/articles/jpmorgan-just-reported-21-2-210400257.html) — Yahoo Finance
- [We're raising our price target on Goldman Sachs after a blowout quarter, upbeat outlook](https://www.cnbc.com/2026/07/14/were-raising-our-price-target-on-goldman-sachs-after-a-blowout-quarter.html) — CNBC
- [Morgan Stanley beats profit estimates on dealmaking boost, strong trading - Reuters](https://news.google.com/rss/articles/CBMingFBVV95cUxNSS1YZ2NFOVEtLTFaVmtvM0N2NXc3enBnUnozLW04OENJQzJoOHBrVkhQYnlOY0l0SmJWVlNUaFZzUHNna2JZMksxWFQ4NTUyeDZPNjFwNjBkOU5RdkpPT1lodzFRMU5Gb25Sa3ZGYjNDbEhjRWpISS1jSkFuUUFJbnVuRmRWTy0xeXoxWkFaal9Yc0M2bHU4RFVYNnRYZw?oc=5) — Reuters
- [PNC Financial Q2 2026 earnings: record revenue, profit jumps 25%](https://finance.yahoo.com/markets/stocks/articles/pnc-financial-q2-2026-earnings-130630518.html) — Yahoo Finance
- [Morgan Stanley is set to report second-quarter earnings — here's what the Street expects](https://www.cnbc.com/2026/07/15/morgan-stanley-ms-earnings-q2-2026-.html) — CNBC

## Related

- [C trade ideas](https://commonquant.ai/stocks/c)
- [GS trade ideas](https://commonquant.ai/stocks/gs)
- [MS trade ideas](https://commonquant.ai/stocks/ms)
- [Latest market news](https://commonquant.ai/news)

## 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 (12-month and 5-year, walk-forward tuned) and stress-tested before they can go live, then monitored against the news hourly while they run.