Goldman Sachs beat earnings estimates by a wide margin this morning. The stock still gapped down at the open and couldn’t recover.
Brandon Chapman caught that disconnect immediately, and it’s the setup he’s watching ahead of JP Morgan’s report tomorrow.
JP Morgan rallied to $312.75 today, its highest level since February 11th. The problem: volume was thin all session. Citigroup hit a new multi-year high on the same light tape.
Brandon’s read is that today’s price action was buyers at the ask, no resistance, no conviction. That kind of move at a higher price just bakes more risk into tomorrow’s number.
Here’s what Brandon broke down in tonight’s video:
- The S&P 500 gapped from 6864 on Friday’s close to 6780 at this morning’s open, driven by Iran ceasefire rhetoric and threats to the Strait of Hormuz.
- Oil pulled back from an intraday high of $105 to $97 but remains above Friday’s close, with futures structure still pricing in a real supply shortage.
- XLF saw two major block trades today: a 20,000-contract call buy at the May 1st $52 strike and a 30,000-contract call buy at the May 15th $52 strike, both rolls that concentrate significant open interest at that level.
- Goldman Sachs beat estimates by a substantial margin and sold off anyway, which Brandon called a direct warning about what a “positive” JP Morgan print could do to the stock tomorrow.
The $52 strike in XLF is the level to watch. Brandon laid out exactly how a drop in volatility after earnings could shrink delta fast and expose all that open interest to the downside.
