Big banks clear stress tests while S&P 500 teeters on tech weakness — long JPMor
Thesis
The S&P 500 is teetering on the edge of a breakdown entirely because of tech stock weakness, but underneath the surface, the market is rotating. While AI-capex heavyweights like TSMC and Microsoft face volatility, the Fed just gave the big banks a clean bill of health, prompting JPMorgan and Goldman Sachs to announce massive buybacks and dividend hikes. Simultaneously, reports show small caps are having their best start to the year in decades. This combination signals a classic 'flight to value' rotation where investors dump speculative tech for cash-rich, dividend-paying banks. Buying JPM and GS here captures the momentum of money flowing from high-risk tech into safe, returning capital.
Strategy approach
Build a rule-based long strategy that enters long JPM and GS on D1 when QQQ drops >1.5% on a 3-day rolling window while IWM (Russell 2000) closes up >0.5%. Exit if JPM or GS drops below their 50-day moving average, with a 45-day max hold.