Three stocks, three charts, three trades, all built around uncertainty in interest rates.
The rate backdrop
ADP jobs data came in a little weaker than expected but moved little. Markets wait for Friday's jobs report, though it may not matter. Two forces pull against each other: the Fed looks set on raising rates, while the Treasury looks set on keeping rates lower. Most of these trades are built around that rate uncertainty. The Fed's path looks fairly clear - two hikes expected by year end. The Treasury's role is the unknown that could hurt financials.
JPMorgan Chase (JPM) - short
Financials keep climbing, which is surprising. The whole XLF financials group has been bid up. This may be rotation: money is leaving semiconductors, which are stuck in a range, and moving into financials.
I take the other side. The core problem is yield-curve uncertainty. Nobody knows what the yield curve looks like 3, 6, or 9 months out. It is close to impossible to predict whether the curve flattens or inverts. An inverted yield curve can signal recession. Any of these outcomes makes banks nervous, and JPM is exposed. The Treasury's actions could damage financials.
JPM sits near an all-time high, less than $10 off its 52-week highs, but I look past the technicals and just take a short. Volatility in financials is still relatively low even with midterm elections coming and rate unknowns, so buying time is cheap. Trade: go out to the November 20 expiration, buy the 340 puts, sell the 330 puts against them. That is a $10-wide spread for a $2.90 debit.
Chart: earnings pushed JPM above old highs near 344, with a high point at 366.50. A short-term downward trend line has broken. The white trend line connects the low near 344 with more recent lows. Levels to watch above: 366.50 (old highs). Support below: 350, 344, and 335. The 5-day (dark blue) and 21-day (teal) exponential moving averages meet around 356-357, near the white trend line - a possible breakdown point. Break it and the next test is the gold 63-day quarterly EMA at 344. RSI trends up and sits above the 50 midline, but a downward trend line gives a triangle shape; watch for a break of either line. Volume profile shows heavy trading between 353 and 358, another pocket at 330-337, and little support until the old-highs range. JPM traded at 358.79, about $8 off the highs.
iShares TLT (TLT) - long, via short put
There is a global bond selloff, and that is the time to take advantage. The bond vigilantes may be showing up, with some sell-side activity in bonds. For reference: ZN is the 10-year Treasury note futures, ZB is the 30-year Treasury bond futures, and TLT blends both.
Reasoning: the Treasury will step in and support long-dated bonds. Yield curve control by any other name is still yield curve control - call it operation twist or a version of quantitative easing. Treasury Secretary Scott Bessent has said they will buy the longer end of the curve, which supports the trade. This is not fighting the Fed; the Fed may raise short-term rates, but this trades with the Treasury.
Trade: sell the 80 put at the November 20 expiration for about a $1 credit. Selling the put means being willing to own TLT. If put the shares, the buy price is 80 minus the $1 credit, so an all-in cost near $79. This is a naked put, so you must be comfortable owning the ETF.
Chart: TLT had a downward-sloping channel with lows at 81.17, and has now broken above it. The white line was tested near 83.20, where price briefly poked above prior peaks then quickly collapsed. Price has fallen back below 82. The 52-week low is 81.17; upside levels stand out at 84.30 and 84.80. Reaching 79 is the break-even for the trade, a good distance down. The 5-day and 21-day moving averages sit near 82.26 and 82.62, trending down; the long-term 251-day EMA also slopes down. A push back above the short moving averages would be an early sign of a trend change. RSI is below the 50 midline with a gentle upward trend line; watch for a push back above 50. Volume profile shows a node near 82-83, thin trading nearby, and the point of control (heaviest trading) up at 87.14. TLT traded at 81.80, near flat on the day.
General Motors (GM) - short
GM has traded sideways over the last month and the last year, still up about 50%, but faces tariff and rate uncertainty. GM is not a stock I follow closely; I trade more liquid names, though GM is tradable. Pulling up the chart showed it just off its highs, with 91 the high and a sharp reversal off that level.
The case for a short: many unknowns stack up. Geopolitical risk is still present. Gas prices are very high. Inflation is still here, and the fix is raising rates. This is not a good setup to be long GM, yet the market has glossed over it, assuming everything is fine into year end. The sharp reversal off 91 means something; I expect a move to the lower end of the range, near 70.
Trade: go out to the December 18 expiration because GM moves slowly. Buy the 80 put, sell the 70 put against it. The 70 short strike marks where the bottom of the channel sits. Done for a $2.30 debit. If GM hits 70, the spread makes about $7.70 on a $2.30 investment. It needs a large pullback by December expiration - about 15%.
Chart: the main feature is a shorter-term downward channel. Highs at 91.85, another short-term ceiling at 88 - levels bulls need to reclaim. Lows near 84, a dip near 79, and a floor around 75. Price now stays inside the channel after pushing just shy of 92. The 5-day and 21-day exponential moving averages line up just above 85; price is below that confluence, so it acts as resistance. Breaking below both is an early sign the trend is shifting, and it looks like it is solidifying as the day goes on. Next test is the 63-day quarterly EMA in gold at 88.37. RSI adds a bearish signal, dropping below the 50 midline and breaking its green trend line. Volume profile shows price has broken through a small node between 86 and 87; the point of control at 81 is the next major test and the heaviest trading area. GM traded at 84.55, down a little more than 1% on the session.
