4 Trade Ideas for JP Morgan: Bonus Idea

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

JP Morgan, $JPM, made a bottom in March and was slow to rebound. It plodded along sideways in a broad range through the end of May. it broke out to the upside in June and touched the 200 day SMA and fell back. It moved back under resistance and held there for the next 5 months. All along it has was making higher lows, creating an ascending triangle. It broke the triangle to the upside 2 weeks ago, giving a target to 131. It has consolidated the breakout since, at a 61.8% retracement of the drop from February, moving back inside the Bollinger Bands®. This move also created a Golden Cross.

The RSI is pulling back from a touch near overbought as it moves sideways, while the MACD rolls lower and is positive. There is resistance at 118.50 and 121.50 then 126.25 before 129.60 and 132.50 then a gap to fill to 135.50 followed by 138.70 and 141.25. Support lower comes at 112.50 and 106.25 then 103.75. Short interest is low under 1%. The stock pays a dividend with an annual yield of 3.14% and has been trading ex-dividend since October 5th. The company is expected to report earnings next on January 15th.

The December options chain shows the biggest open interest at the 100 strike on both the put and call sides with nearly the same level at 115 on the call side as well. The January chain shows open interest build from 125 to a 100 on the put side. On the call side it is bigger and level from 100 to 120. The March chain also is biggest at 100 on the put side with a cluster from 115 to 120 on the call side standing out.

JP Morgan, Ticker: $JPM

Trade Idea 1: Buy the stock on a move over 118.50 with a stop at 112.50.

Trade Idea 2: Buy the stock on a move over 118.50 and add a December 24 Expiry 112.50/105 Put Spread ($1.85) while selling the January 125 Call ($1.50).

Trade Idea 3: Buy the December/January 120 Call Calendar ($1.50) and sell the December 105 Put (90 cents).

Trade Idea 4: Buy the January 100/120/125 Call Spread Risk Reversal (20 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 heading into the shortened holiday weekend sees equity markets have paused to catch their breath.

Elsewhere look for Gold to continue in consolidation while Crude Oil continues a short term uptrend in a broad range. The US Dollar Index looks to consolidate at the bottom of a broad range while US Treasuries are showing a possible reversal higher. The Shanghai Composite looks to continue to mark time moving sideways while Emerging Markets move higher in an uptrend.

The Volatility Index looks to continue to drift lower making the path easier for equity markets to the upside. Their charts continue to look strong, especially on the longer timeframe as they hold at highs. On the shorter timeframe both the QQQ and SPY are in consolidation mode moving sideways while the IWM looks stronger moving up. Use this information as you prepare for the coming week and trad’em well.

If you like what you see above sign up for deeper analysis and trading strategy by using the Get Premium button above. As always you can see details of individual charts and more on my StockTwits page.

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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