Yesterday’s rally in the broader market lifted the major U.S. equity indices between 1% and 1.50% across the board. All of the sectors within the S&P 500 participated, although the transportation stocks which outperformed recently, underperformed on the day.
The below chart shows the intraday performance of Friday and yesterday (Monday). Note how everything moved together and during the end of day rally totally connected. Even consumer staples (red line), which lagged the second half of the day on Monday, rallied hard into the close and almost caught up with the rest of the sectors. Correlation is high and if the broader market can continue to push higher it should take with it just about all of the sectors.
The financial sector as viewed through the Financial Sector SPDR ETF (NYSE:XLF)was the best performer on the day, up 2.06%. On the charts the sector is right at its 2012 high, looking to have enough momentum to rally higher over coming weeks. An eventual target would be near the 2011 highs at $17.20, or about 5.30% higher from Monday’s closing prices.
JPMorgan Chase & Co (NYSE:JPM) too had a good day on Monday as the stock rallied right into its mid-October resistance level around $43.50. Not much stands in the way of the stock to push through this resistance level and toward the high $40s.
From a relative performance standpoint JPMorgan Chase & Co. (blue line) hasn’t outdone itself and trades more or less with the pack of its competitors in 2012.
Which finally gets me to the chart of JPMorgan Chase & Co itself. Measured from the stock’s reaction low in June up to the October highs, the stock had retraced 38.20% (Fibonacci retracement number) in mid November, which served as support. This support zone, near $38.80, also coincided with the stock’s 200 day simple moving average, which further signifies said level as important.
Recommendation: A quick look at the momentum oscillators shows that JPM stock may be overbought in the immediate term. However, once the stock manages to break past the October highs a next logical upside target becomes the 2012 highs from March, near $46.50, or about 7% higher from Monday’s closing prices. That level also happens to coincide with a 23.80% Fibonacci extension move of the June – October rally.