Trade of the Day: Technicals Say JPM has Much Further to Fall

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JPMorgan Chase & Co. (JPM) — Of the 37 companies in the S&P 500 that reported fourth-quarter results through Friday, FactSet reported that only six missed estimates — and three of them were big banks. In addition to JPM, Citigroup Inc (C) and Bank of America Corp (BAC) fell short of consensus expectations, marking the first time all three have disappointed in three years.

The decline in JPM stock and the other two names was so large that it dragged the Select Sector Financial Slct Str SPDR Fd (XLF), of which they make up nearly one-fifth of the assets held, down 2.6% last week.

The banking sector is not in favor and large bank stocks could be the subject of massive institutional selling.

On Jan. 14, JPM stock broke a double-bottom, as well as its 200-day moving average, on a bearish gap down on much higher-than-average volume. Even though there is support at $55 from a triple-bottom, its internal readings (MACD and relative strength) are weak.

Momentum has been negative since JPM stock broke its 200-day moving average, and it appears to be accelerating lower again.

Sell JPM stock short at $55 or higher with a trading target of $46, which is 17% below current prices.

Short selling is a speculative technique and only suitable for traders willing to accept the risks. Check with your broker for special rules concerning short sales and their ability to borrow shares.

A stop-loss order should be entered at $59 to protect against a change in the trend and the potential for theoretically unlimited losses.

JPM Stock Chart
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Article printed from InvestorPlace Media, https://investorplace.com/2015/01/jpmorgan-chase-co-jpm-stock-trade-day/.

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