How JPMorgan Can Hit New Highs After Earnings Beat

JPMorgan beat analyst estimates on earnings and revenue but the stock is struggling to make new highs. Here's how the stock can get there.
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JPMorgan (JPM) - Get Report stock on Tuesday is higher -- but short of 52-week highs.

That’s somewhat surprising, given how strong the bank stocks have been, led by JPMorgan, and given how strong an earnings result the company just reported.

Further, JPMorgan stock came very close to new highs on the day, which currently sit up at $141.10 when unadjusted for dividends. Tuesday’s high so far? $140.76. 

Citigroup (C) - Get Report is also rallying on Tuesday after better-than-expected results and it is hitting new highs.

For the quarter, JPMorgan breezed past both earnings and revenue estimates. And despite the big rally over the past few months, the bulls still found enough positive takeaways to push the shares higher.

That’s a good reason for Real Money to nominate JPMorgan as Stock of the Day. Let’s take a closer look and see why new highs are certainly possible for this best-in-breed bank.

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Trading JPMorgan Stock

Daily chart of JPMorgan stock.

Daily chart of JPMorgan stock.

Even though JPMorgan stock is up 28% from its October lows and maintained an overbought condition from mid-October to the end of December, the bulls are still finding reasons to invest in the stock.

With Tuesday’s post-earnings action, JPM shares are pushing past pre-earnings resistance, which came into play at $138 and is clearly identified on the chart above. The stock is now testing into its former (dividend-adjusted high) of $140.20.

Investors may also notice that JPM stock no longer carries a technically overbought condition, which it did a few weeks ago (blue box). 

If JPMorgan stock can clear $140.20, then the prior unadjusted high of $141.10 is on the table. Above that and channel resistance is possible (blue line), which could come into play in the $142 to $143 area.

What happens if the opposite plays out in the form of a pullback?

The $135.50 to $136 area has been support since mid-December. It was in play ahead of earnings as the 20-day moving average was struggling to support the stock. For the bulls’ sake, it was a good thing that channel support was there to give it a lift.

On a pullback, if JPM stock loses $135.50, it opens up to more downside, most likely down to the 50-day moving average. 

Below that and the bank stock may need more time to consolidate before the bulls step in.