Wall Street profits heading for an all-time record — buy the big banks before earnings season

Verdict: strong profits, weak confirmation — wait for the entries

The idea's core claim is verifiable: JPM's Q2 2026 net income jumped 28.3% to $21.2B, GS rose 17.7% to $6.6B, and GS's trailing dividend is $18 per share versus $13 a year earlier — real evidence the trading-and-deal engine is running, and per Bloomberg (2026-10-06) industry profit is on pace for $90B. But the strongest counterevidence sits directly opposite that: all three banks show net open-market insider selling in the provisional September 2026 reports (GS about -$29.3M, JPM about -$6.6M, MS about -$8.9M), and GS's debt-to-equity climbed 10.5% quarter over quarter to 3.57. The completed backtest is thin — a 9-month GS-only run netting +1.7% over 92 trades with a 3.8% max drawdown, while the 12-, 24-, and 60-month windows could not be evaluated, so no robust parameter setup was established. Nothing is actionable yet: JPM is the closest entry, needing a daily close about $8.93 above its 20-day average at $341.04, and MS sits $2.60 under its 200-day at $194.03, while GS needs a $58.34 climb to reclaim its 200-day at $959.27. The verdict: wait — the thesis has numbers behind it, but insiders, leverage, and a narrow backtest argue for letting the rules trigger before committing.

Trade now: JPMorgan is one close away, Goldman is still $58 away

Nothing is live to trade yet — the setup is waiting on its own conditions. The strategy needs each name to trade above its 200-day average, below its 20-day average, with RSI (14) under 45, and then a daily close crossing back above that 20-day average. As of the latest close, JPM ($332.11) is the closest: price is above its 200-day average ($321.75), below the 20-day ($341.04), and RSI (14) at 29.7 is well under 45 — the only unmet piece is the cross back above the 20-day, about $8.93 or roughly 3% overhead. MS ($191.43) is nearly there too, sitting just $2.60 below its 200-day average of $194.03 with RSI (14) at 33.2. GS ($900.92) is furthest away, needing a $58.34 move just to reclaim its 200-day average at $959.27. 'Wait' here means a concrete thing: hold off until JPM or MS posts a daily close through the levels above while the other conditions still hold. The risk parameters are fixed by the rules once a position opens — a stop at a 2.4% loss and a take-profit at 4.7% gains, which is roughly 2-to-1 reward to risk, with positions capped at 25% of the book and sized off the second support level. The 90-day holding-period exit and a 127.2% Fibonacci extension target provide the longer-horizon exits. On evidence: the completed 9-month daily-bar run for GS produced a 1.7% return over 92 trades with a 48.9% win rate and a 3.8% maximum drawdown — a modest, controlled result, not a homer, and win rates under 50% only work because winners are twice the size of losers. Note the deeper windows (12, 24, and 60 months) could not be evaluated because one unfilled data gap in the GS series blocked them, and for the same reason no robust parameter setup was established — the frozen rules ship as written. One more caution flag from the filings: insiders at all three banks were net open-market sellers in the September 2026 period (GS about -$29.3M, JPM about -$6.6M, MS about -$8.9M), a counterpoint to the bullish thesis while the entry conditions ripen.

Record bank profits are landing in the numbers the market only sees once a quarter

The thesis's central claim — that banks are in their best profit year and the market under-prices it because revenue detail arrives only quarterly — is directly supported by the latest filings. Goldman Sachs reported $6.63B in net income for Q2 2026 (period ended 2026-06-30), up 17.7% from $5.63B in Q1, with quarterly return on equity rising to 5.4% from 4.6%. JPMorgan's Q2 net income was $21.16B, up 28.3% quarter over quarter, and Morgan Stanley held steady at $5.58B. Per the Bloomberg piece on record Wall Street bonuses (2026-10-06), industry profit is on pace for $90B — a figure consistent with the quarter-over-quarter acceleration visible across all three companies here. The cash-return channel reinforces the story. Goldman's trailing twelve-month dividend is $18 per share, up sharply from $13 in the prior year, with annual payout totals rising 38.5% and the most recent quarterly payment at $5 per share (ex-date 2026-09-01). Companies that keep raising payouts into a record-profit year are, in effect, confirming internally that trading and deal-making revenues are durable — exactly the signal the idea says bonuses provide. The defensive framing also has some numerical support. The idea argues banks can keep earning even if the broader market stalls, because uncertainty fuels trading desks — a point echoed by Dimon's comments (per the Bloomberg video, 2026-10-06) that sticky inflation and rising rates are his concern. Meanwhile the completed nine-month backtest on GS traded 92 trades with a 48.9% win rate and netted +1.7% with a modest 3.8% maximum drawdown, suggesting the strategy profile can grind out returns without deep drawdowns in this window. Cross-stock correlation is covered in the dedicated section, but the key read here is that the three names moved as one sector-wide earnings story, which is what the thesis needs. Taken together — accelerating quarterly profits, a rising dividend trajectory at the highest-margin name, and a macro backdrop (record S&P 500, per Bloomberg, 2026-10-06) that supports deal-making and asset-management fees — the bull case is grounded in numbers that are verifiable…

Scores

• Conviction score breakdown: 53
• Thesis support: 72
• Trade readiness: 45
• Risk quality: 50
• Backtest evidence: 35
• Fundamentals trend: 65

Watch items

• JPM — JPM daily close vs 20-day EMA
• JPM — JPM RSI (14)
• MS — MS daily close vs 200-day SMA
• GS — GS daily close vs 200-day SMA
• GS — GS insider net open-market activity (September 2026 filing)
• GS — GS next quarterly dividend declaration (trailing 12m $18.00/share)