JPMorgan (JPM) stock has not been performing well, but you could say that for many of the bank stocks out there.
Shares are down about 23% from the highs made in the fourth quarter, which is when the correction in this stock really got underway.
Currently, JPMorgan stock is working on its sixth straight monthly decline. Ouch.
With earnings season set to begin in earnest on Wednesday with JPMorgan kicking things off for the banks, bulls are hopeful that the bank can turn its trend around.
While an increase in interest rates can be good for banks (for net interest margin), it can also be bad when results in decreased borrowing. Further, investors have been worried about a potential recession, which negatively impacts most businesses but especially the banks.
The March CPI report was released on Tuesday, showing an 8.5% increase in inflation, the highest since 1981. CEO Jamie Dimon has been vocal but optimistic about the situation, saying the Fed needs to continue raising rates, but that the economy may find some equilibrium.
Given this backdrop, let's see how the stock looks ahead of earnings.
Trading JPMorgan Stock
Chart courtesy of TrendSpider.com
JPMorgan stock continues to make a series of higher lows, but didn’t make a new low last month. The hope is that that lower high leads to a better technical situation and isn’t simply delaying the inevitability of lower prices.
When I look at the weekly chart, a few levels stand out in both directions.
On the upside, a post-earnings pop will have active resistance in play from the 10-week moving average near $140. On a push above that, the March high will be in focus near $144.
Bulls need to see JPMorgan clear the 10-week. This has been a stubborn resistance mark for most of the year. However, if we see a post-earning rally, be aware of the “sell the news” reaction as the main risk.
A rally to the $140 to $144 zone has the potential to fade lower if investors can’t keep the stock elevated. However, above this zone opens the door to $150, then $155.
On the downside, the $127 to $128 area has been support for the past two months. Just below that is the 50% retracement from the Q4 2021 high to the Q2 2020 Covid low. Conveniently, that ties in with the rising 200-week moving average.
If JPMorgan stock opens near $125, aggressive bulls may find it as a worthwhile long position looking for a possible bounce.
However, if the stock moves below that level, it could open the door down to the 61.8% retracement near $113.
Long story short, watch $140 to $144 on the upside and $125 to $128 on the downside. Beyond either level and the stock may gain additional momentum — for better or for worse.
