Chart of the Week: JP Morgan Chase
It’s time for our chart of the week, and we’re gonna be taking a look at the biggest bank in the world here, which is JP Morgan; JPM is the symbol. Let’s take a look at this chart here and look at a couple of new indicators that we haven’t taken a look at in quite some time.
Volatility spiked but is starting to recede
So JP Morgan had a pretty volatile week last week. We can see the stock fell sharply on Monday after Jamie Dimon had talked about his succession plan/retirement plan. We see a nice six or seven day up move just basically obliterated by one day, on Monday.
But we went down to the 20 day moving average, which is often the spot where stocks like JP Morgan that are in strong uptrends find support. So we saw it find support there, came back and tested it on Thursday, and had a really strong day on Friday and went out at the highs of the day.
What’s interesting about this chart is, if you go back to the April highs, you can see that the stock is just above there, and it fell right through it again last Monday – sharply – and didn’t stop until it hit that 20 day moving average, which is probably a good spot to add that stock.
We do see as the stock went down, it did have some high volume on that one day and it pulled back a little bit on lower volume. We do see volatility starting to recede a little bit. I’ll show you that graphically in just a moment.
Money flow has slowed
Money flow, which had popped really high when the market was going up and then right after earnings came out in April, we still see a series of higher highs and higher lows in JP Morgan. That has pulled back a little bit on the money flow. It’s just trying to slow down over here.
What I mentioned to you about volatility, which is basically the ATR at the bottom here – the average true range. It jumped up in April in anticipation of the earnings report. Whether it was going to be strong positive or strong negative, it didn’t really much matter.
But volatility has started to recede here. You can see it started bending down in April and early May – popped up on that one day but it’s still coming back down.
The stock is trying to find a range
What do we say about this?
We are saying that basically volatility is starting to come down, options pricing is starting to get cheap. This stock is basically trying to find a range. We think that this range is probably going to be somewhere between here and there – about $192 on the low side and about $200 on the high side. That’s kind of where a lot of congestion is – or where a lot of buying and selling has occurred. If the stock stays above $200, however, we could make a run at last week’s all-time highs, which is about $204.50 to $205.
We continue to look at this one indicator over here, which is really one that I haven’t looked at in quite a while. It’s one of my all-time favorites. It’s called the on-balance volume, created by Joe Granville, back in the late ’70s – early ’80s. This shows a nice strong uptrend of on balance volume, which is basically better volume on the up days than on the down days. It’s been steady and rising from the beginning or the middle of January.
All in all JP Morgan is a great looking chart. It’s got a lot of volatility over here and you can see some of that happened back in April when the earnings report came out. But it did find some good support. It’s in a rising uptrend here. The textbook definition of an uptrend is higher highs and higher lows, and it’s still there. Once it gets above that $205 area, we think it’s got some room up to $225 to $230.
So that’s JP Morgan!
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