Bank Earnings Week: JPMorgan and BNY Mellon's Bullish Patterns Set Up for Q4 Catalyst

The catalyst is clear and immediate. JPMorgan and Bank of New York Mellon kick off the major bank earnings season this Tuesday, with the broader sector following through the week. For traders, this is a classic event-driven setup. Both stocks are currently trading in bullish technical patterns, suggesting underlying momentum that could be amplified by strong results. The market is watching for confirmation that the sector's recent strength has a fundamental basis.

Yet the context is critical. This earnings week arrives against a dense calendar of economic data, with the December CPI report due out Tuesday morning. That inflation print will provide the immediate backdrop for interpreting bank results. If the CPI shows reacceleration, it could pressure rate-sensitive sectors and temper expectations for Federal Reserve cuts in 2026. Conversely, benign data could provide a tailwind. The timing is tight, with the CPI release just one day after financial sector earnings begin, creating potential for the inflation data to either support or undermine optimistic narratives from bank commentary.

The bottom line is a high-stakes convergence. The bullish technical patterns on JPM and BK offer a tactical foundation for a move. But the week's economic data, starting with the CPI, will determine whether that move is sustainable or a fleeting reaction.

The Catalyst: Q4 Earnings and Market Expectations

The immediate price action is set by a powerful sector-wide growth story. For the tenth consecutive quarter, S&P 500 earnings are projected to expand, with Q4 growth expected at 8.3%. The financials sector, however, is the standout, with earnings forecast to surge 29% in the quarter. This robust backdrop raises the bar for the banks reporting this week.

For JPMorgan, the consensus is clear. The market expects EPS of $4.91 and revenue of $46.17 billion for the quarter. That's a slight step down from its own Q3 report, where it posted profit of $5.07 EPS and revenue of $46.4 billion. The key question is whether the bank can maintain its momentum. The focus will be squarely on two profitability drivers: Net Interest Margins (NIMs) and investment banking fees.

The Fed's three rate cuts in late 2025 have created a complex dynamic for NIMs. While lower rates typically pressure this key metric, they also reduce the cost of deposits, providing a partial offset. Investors will be watching for the net effect. At the same time, investment banking fees remain a critical growth engine. After a strong rebound in Q3, driven by rising dealmaking, this segment will be scrutinized for signs of sustained strength heading into 2026.

Tactical Implications: The Trade Setup

The trade is clear: this week's earnings are a binary catalyst for the sector's bullish technical patterns. For JPMorgan, the setup is a breakout play. The stock is trading at a record high and has formed a classic series of higher highs and higher lows. The immediate technical target is a move above $335 to fresh record levels, with $350 in focus. The earnings report is the trigger. A beat on both EPS and revenue would validate the bullish narrative and likely propel the stock toward those highs. The risk is a miss, which could quickly reverse the momentum.

The key narrative shift to watch is a pivot from celebrating a strong year for U.S. financials to caution on the sustainability of that strength. The market is pricing in a 29% earnings surge for the sector. If JPMorgan's results show even a hint of deceleration in NIMs or a slowdown in investment banking fees, it could signal that the easy growth is fading. That would invalidate the bullish technical setup, turning the pattern into a head-and-shoulders top.

Volatility is a built-in risk. The week's economic data and geopolitical tensions create a volatile backdrop. The recent escalation in the confrontation with the Fed, including grand jury subpoenas for Chair Powell, has already sparked a jump in gold to a record high as fears over central bank independence resurface. This political friction adds a layer of uncertainty that could amplify market swings, regardless of the bank results. Similarly, deadly protests in Iran and oil market volatility introduce external shocks that could overshadow corporate news.

The bottom line is a high-conviction, high-risk setup. The bullish technical pattern provides a tactical foundation. The earnings catalyst offers a clear binary outcome: a beat leads to a breakout, a miss leads to a reversal. The trade hinges on whether the bank can deliver the numbers to keep the sector's momentum story alive, all while navigating a turbulent macro and political environment.