11/13/09 - 10:44 AM EST
By L.A. Little of tatoday.com, author of Trade Like the Little Guy.
JPMorgan Chase is one of those perennial financial stars -- the monolithic bank that seems to be everywhere and nowhere at the same time.
It's everywhere in that it is involved in so many deals and in countless markets. The bank is nowhere in that it's just behind the scenes, seldom in the limelight like Goldman Sachs(GS Quote) or Citigroup(C Quote). JPMorgan remains just outside the glare of the spotlight, yet is always in line when it comes time to rake in the dough.
Since last year's financial melt, the bank has expanded its operations further, has digested more competitors, and has been applauded for doing so. JPMorgan's share price has ascended as well, almost back to all-time highs. Goldman needs to take some lessons from it on public relations.
Of course, this column is about the charts and where the next trade lies. With JPMorgan, that trade is a starter buy in the $39 area and further purchases back in the $32.50 to $35 area. You have to purchase enough around $39 just in case the lower prices simply never materialize. Unless volume expands seriously, the lower price range would be a great place to stock up, and here's why.
On a long-term time frame, the stock exhibits distinct levels of support and resistance.
Looking at the monthly chart and gauging volume characteristics, it is hard to see JPMorgan trading and staying under $30 in the long term. From an intermediate-term view, JPMorgan is in a suspect uptrend, although it hasn't pushed too far in that direction.
A retest of that $38.89 bar from May appears to be in the cards the way it trades. I say this because the short-term view is definitely sideways with volume spikes occurring at the short-term support line that has developed in the $40.50 to $41 area.
This is another case when each time the stock moves down to support it bangs on it with higher volume. It's like taking a sledgehammer and beating on the floor you're standing on. Sooner or later it will probably give way. Although not shown, this latest formation looks to be an AB=CD pattern that measures to, you guessed it, $39 ($47.50-$41.50 = $6 and $45 - $6 = $39).
If you refer back to my article on Wells Fargo and the Financials Select SPDR exchange-traded fund, XLF was the same story. There we saw the same pounding on support. JPMorgan is the largest weighting in that ETF. The next two greatest weightings are Wells Fargo and Bank of America. Both of these stocks have charts that look to retrace. These three stocks, when taken together, account for roughly 30% of the ETF. Looks to me like it is just a matter of time before lower prices print for the XLF.
One last note, and a serious reason you want to be bullish on JPMorgan, is the high volume spike to $47.50. It's unusual to get a large volume spike high that doesn't get retested. Assuming that happens, you want to be long this stock when that time comes.
So, until next time, keep trading the charts!
At the time of publication, Little was short Wells Fargo. |
发表于 2009-11-13 12:14
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