Buy JPM on a Pullback to its 50-Day Moving Average

by Sam Collins | March 24, 2014 1:57 am

JPMorgan Chase (JPM[1]) — This global financial services company has assets of nearly $2.42 trillion and operates in over 50 countries. Although earnings per share (EPS) for 2013 fell to $4.35 versus $5.20 the prior year, S&P increased its projected 2014 estimate to $6.04 from $5.96, and it expects $6.40 for 2015. These increases are expected to result from an expanding capital markets business that should benefit from a European recovery, a strong asset management business, and expanding income from its U.S. branch network.

S&P expects JPM to raise its common stock dividend and share repurchase plan. The company currently pays an annual dividend of $1.52 for a 2.5% yield. S&P raised its 12-month fundamental price target by $1 to $66.

Technically, JPM broke from a consolidation in May to form a new bull channel. The 200-day moving average and the support line of the bull channel continue to frame the price structure.

In November and December, buying volume increased, and the stock broke to a new high. But profit-taking and a difficult month for stocks drove it to support at its 200-day moving average, where it reversed. JPM is under heavy accumulation with support from a new MACD buy signal.

The results of the Federal Reserve’s “stress test” of the nation’s largest banks released Thursday resulted in a clean bill of health for 29 of 30 banks. But it ranked Bank of America (BAC[2]), Morgan Stanley (MS[3]) and JPM “near the bottom of the pack.” This could result in profit-taking and a dip to JPM’s 50-day moving average at $57, which is now the buy point. My trading objective is $65 with a longer-term objective of $70.

JPM Chart
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Chart Key[4]

  1. JPM:
  2. BAC:
  3. MS:
  4. [Image]:

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