Big banks ace the Fed's stress test and unleash cash — buy the financial payout
Thesis
When banks pass the government's stress test with flying colors, it gives them the green light to return excess cash to shareholders. A $50 billion buyback from JPMorgan essentially means the company is committing to buy its own stock, which supports the share price by reducing the number of shares available. Combined with Goldman raising its cash payouts to investors, these moves make both stocks highly attractive and usually trigger a wave of buying from large institutional investors.
Strategy approach
Build a rule-based long strategy entering on JPM and GS on the Daily timeframe. Entry conditions: enter when the 9-day EMA crosses above the 21-day EMA and daily volume is >120% of the 20-day average volume. Exit conditions: close position if the 9-day EMA crosses below the 21-day EMA, or if price drops 4% below the entry price. Set a max hold period of 30 trading days.