Two sectors have been trading incredibly well lately: financials and energy.
Helping lead the charge for the financials has been JPMorgan (JPM) - Get JPMorgan Chase & Co. (JPM) Report, a company that is widely considered among the highest-quality investment banks.
The company will kick off fourth-quarter earnings season next Wednesday, reporting its results before the open.
It will do so on the same day as BlackRock (BLK) - Get BlackRock, Inc. Report and a day ahead of Wells Fargo (WFC) - Get Wells Fargo & Company Report, Citigroup (C) - Get Citigroup Inc. Report and other banks.
We already looked at energy stocks this morning; now let’s turn our focus to the banks.
JPMorgan stock has been on a strong run lately, ripping off a 12.5% gain in six days in mid-September.
It’s also up in five of the past six sessions, with the one down day coming in with a loss of just 0.11%.
Amid the current move, we have a breakout on our hands. Can it last through earnings?
Trading JPMorgan Stock
While tech stocks were rolling over in late January and early February, JPMorgan was ripping higher.
We had a breakout over the pre-Covidd high of $141 and the stock ultimately ran north of $150. From there, JPMorgan settled into a trading range with support at $146.50 and resistance at $167.50.
The stock tried to break out over this level last week but was rejected. This week, though, the bulls grabbed control, with a clean breakout under way.
The banks don’t tend to be very robust trades on the upside after they report earnings. In fact, often enough the rallies are sold in this group.
If that happens again, I’d love to see the 10-day moving average hold as support, and for prior resistance at $167.50 to turn into support. If that happens, the breakout will be intact.
Below these measures puts the 21-day and 50-day moving averages on the table.
On the upside, let’s see if JPMorgan stock can climb to the 161.8% extension near $180.
That extension comes from the entire Covid trading range, so it may very well be a significant level if it gets there.