Chart of the Day – C and JPM on Talking Numbers

by Enis July 25, 2012 1:35 pm • Commentary

Here’s a preview of what I’ll be discussing on Talking Numbers today between 3:30 and 3:35 pm EST on CNBC:


I’ve expressed my bearish view on U.S. financials with 2 separate trades in JPM (first and second) and with 2 separate trades in MS (first and second).  I’ll be discussing C and JPM charts today on Talking Numbers.

The first chart is a 3 year chart of C (actually since Apr 2009 to make it cleaner):



The 23-25 level is obvious support that held on 2 separate occasions late last year, and has held on 3 tests so far this year.  But each time support gets tested, it gets weaker, and each subsequent bounce from support has become weaker as well.  With European banks making new 25 year lows this week, I expect C to finally break the important $25 support in short order.

Speaking of European banks, here is a chart comparing JPM vs. SX7E since Apr 2009:



In this chart, we can see how JPM has been correlated with the European banks over the past 3 years.  Interestingly, that correlation broke down at the start of the year, but JPM has played some catch up to the downside, and I expect more catch up ahead for JPM, with another test of the important $30 support level in the next couple months.  The global financial system is simply too connected to ignore the price action in Europe, and the deterioration in financial conditions in European banks.