JPM takes over FRC. Perhaps this deal is no surprise considering all of the rumors floating around last Friday. However, from 30,000 feet, I cannot help but think that the series of bank failures since early March-- and the Federal Govt's intervention to paper over the losses and plug the holes in the financial system dyke-- are merely the most recent examples of the unintended consequences of and systemic distortions from Fed policy "experimentation" (QE and ZIRP) that was implemented by Fed Head Bernanke to save the financial system during the Great Financial Crisis (2007-2008), but which remained in place until 2018 (followed by more gargantuan QE to save the economy during the Covid Shutdown)!
Now that FRC has been taken out of harm's way-- or is prevented from opening harm's way, is everything hunky-dory? Hardly (IMHO), but one way for us to evaluate current conditions is to keep a close eye on JPM, now the strongest bank on the planet.
Bottom Line: JPM spiked to a 145 high in reaction to the FRC news, which represents a new 14-month high (see my attached Daily and 4-Hour Charts). As long as any forthcoming give-back weakness is contained above 141.35 on a closing basis, today's strength triggers upside potential to an intermediate-term target in the vicinity of 160.
However, should JPM prove unable to sustain today's gains, and instead reverses back beneath the 16-month resistance line that was hurdled in reaction to the FRC purchase (steal), then my work will argue that the JPM reaction to FRC represents a "sell-the-news" situation indicative of the end of an upmove rather than an acceleration into one... Last in pre-market is 143.98...