4 Trade Ideas for JP Morgan: Bonus Idea

Here is your Bonus Idea with links to the full Top Ten:

JP Morgan, $JPM, comes into the week pulling back from what could be a failed reversal higher. It ended the week printing a Bearish Engulfing candle, closing on the low, suggesting more downside. This is just above the 61.8% retracement of the post pandemic move higher. It had been in consolidation here for 2 months before that attempt higher. The RSI is dropping to the lower edge of the bullish zone with the MACD crossed down but still positive.

There is support lower at 114 and 112 then 110.50 and 108 before a gap to fill to 105.10. Resistance higher sits at 116 and 118 then 120 and 123.50. Short interest is low under 1%. The stock pays a dividend with an annual yield of 3.49% and has traded ex-dividend since July 5th. The company is expected to report earnings next on October 14th.

The September options chain has the largest open interest at the 120 strike for both puts and calls then 115 and 110. In the October chain open interest builds from 130 to a peak from 115 to 105 then tails to 90 on the put side. On the call side it builds from 110 to a peak at 140. In November, open interest is biggest at the 100 put and from 115 to 130 on the call side.

JP Morgan, Ticker: $JPM

Trade Idea 1: Sell the stock short on a move under 114 with a stop at 118.

Trade Idea 2: Sell the stock short on a move under 114 and add a September 116/120 Call Spread ($1.65) while selling the October 100 Put ($1.55).

Trade Idea 3: Sell the October 95/130 Strangle ($1.70).

Trade Idea 4: Buy the November 100/120/130 Call Spread Risk Reversal (70 cents).

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After reviewing over 1,000 charts, I have found some good setups for the week. These were selected and should be viewed in the context of the broad Market Macro picture reviewed Friday which with only 3 trading days left in August, saw equity markets had a week where they went from optimistic to horrified following the Jackson Hole speech.

Elsewhere look for Gold to continue its pullback while Crude Oil resumes the downtrend. The US Dollar Index continues to move to the upside while US Treasuries consolidate in their downtrend. The Shanghai Composite looks to continue a short term move lower while Emerging Markets remain in a downtrend.

The Volatility Index is slightly elevated and biased higher making the path more difficult for equity markets to the upside. Their charts took a beating on the short term timeframe, possibly creating a new downtrend. On the longer timeframe there is still the prospect that June was the long term bottom until it is violated by a lower low. Meaning any reversal before then is a positive. Use this information as you prepare for the coming week and trad’em well.

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The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.

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