Big banks get green light to return billions while tech crumbles — rotate into J
Thesis
JPMorgan and Goldman Sachs passing the Fed stress test with flying colors unlocks $50 billion in buybacks and dividend hikes — a massive direct injection of capital into bank shareholders' pockets. At the same time, the Nasdaq is getting hammered by a chip selloff and the dollar is hitting a 13-month high on rate hike fears. When tech stumbles and rates rise, money typically rotates into financials because banks earn more on loans when rates go up. This combination of a clean stress test, huge shareholder payouts, and a cooling tech market creates a compelling case for buying bank stocks as both a growth and safety play.
Strategy approach
Build a rule-based strategy that enters long JPM and GS on D1 when the 10-day moving average of QQQ is declining (QQQ below its 10-day SMA) and JPM or GS is within 2% of its 20-day high. Exit after 15 trading days or if the stock drops 4% from entry. Weight entries equally.