Why JPMorgan Chase Is Holding Up In Down Market: What The Stock Chart Says

Not all issues are off to as a rocky start to the New Year as the S&P 500 index. In fact, with a potential recession looming in 2023, one would expect the banking sector to be taking it on the chin along with the broad market.

That is not the case with JPMorgan & Chase Co JPM, which is battling to stay green in Monday’s session, making it the PreMarket Prep Stock of the Day.

JPMorgan's Q4 Comeback: In early October, when the issue bottomed at $101.28, it was down 36% for the year and it appeared it was left for dead. At the October low, the S&P 500 index was down 27%.

By the end of the year it was a different story. The index, which had a formidable rally, faded into year-end, finishing in the red by nearly 20%. JPMorgan Chase has slightly retreated from its recent high and ended 2022 in the red by only by 15%.

As of 12:30 p.m. EST Tuesday, that divergence continues as the index is lower by nearly 1% and the issue is in the green by 0.41%.

Bullish Take: The issue is exhibiting excellent relative strength, and if the index can find support and rally, JPMorgan could be one of the leaders on the upside.

The confirmation of another leg higher may come if the issue can clear a pair of monthly highs from November ($138.18) and December ($138.66).

Adding more significance to the $138 area is that the stock topped out last April at $137.41, which set the stage from the major move down to the October low.

Bearish Take: With JPMorgan Chase being a major component of the S&P 500 index and that index breaking down, the issue should be soon to follow.

The stock hanging on to its gains is gift to shareholders who bought the dip in the fourth quarter. 

A stealth bear market spares many issues, and if the index intends to have another miserable year, this bank stock will eventually follow.

For investors choosing to exit the issue on weakness instead of strength, the psychological support level of $130 is important. Over the last few weeks, any retreats under that level have been bought, and JPMoran Chase has not closed below it since Dec. 16.

PreMarket Prep's Take: Toward the end of Tuesday's show, the author of this article noted the relative strength in the issue and questioned the reasons for it. “This is the type of value stock that investors have been seeking out," said co-host Dennis Dick. “It pays a dividend and has a modest price to earnings ratio.”

The other banks have sold off, Dick said, adding that he would sell JPMorgan if it was in his holdings. 

JPM Price Action: Off the opening bell, the issue caught a bid with the index and rallied all the way to $136.74, which was just shy of its Dec. 13 high of ($137.09) and reversed course.

It has now retreated nearly $3 off that high and is trading actively around Friday’s closing price of $134.10.

The discussion on the issue from Tuesday’s show can be found here:

JPMorgan Chase CEO Jamie Dimon. Benzinga file photo by Dustin Blitchok.