JPMorgan Chase & Co. (JPM) is up this morning in reaction to its latest quarterly earnings report. It is our Stock of the Day for Real Money. I last looked at JPM in late July. At the time I wrote, "JPM has improved this month. Traders could look to buy a dip just below $110, risking below $105." Traders may have been able to make some money on that trade, but today is another day. Let's check out the charts and indicators and take a "bigger picture" look instead of focusing on today's rebound in JPMorgan Chase, which is a holding of Jim Cramer's Action Alerts PLUS charitable trust.
In this daily bar chart of JPM, below, we can see repeated rejections of the $118-$120 area. We can see that prices are below the declining 50-day moving average line and below the cresting 200-day line. More important, I believe, is we can see a long decline in the On-Balance-Volume (OBV) line from February. Yes, February!
Investors and traders of JPM have been more aggressive sellers for the past seven months. We have a disconnect. JPM is headed by Jamie Dimon, who is revered as a great manager and someone who walks on water, but someone has been selling the stock for months.
In this weekly bar chart of JPM, below, we can see more signs of potential weakness. Prices are below the rising 40-week moving average line. The weekly OBV line is pointed down from January and the Moving Average Convergence Divergence (MACD) oscillator has crossed to the downside for another take-profits sell signal.
In this Point and Figure chart of JPM, below, we do not have today's premarket action plotted. Prices are pointed down with a possible $98.54 price target -- a new low for the move down. A rally to $118.86 is needed for a breakout to the upside.Bottom line strategy: The price action today and early next week will be interesting. JPM could rally into the $112-$114 area and fail. Fail? Can we say that about JPM? If prices fail around the underside of the 200-day moving average line, then I am reading the charts correctly. We'll see.