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JPMorgan Earnings Preview: Here’s How the Chart Looks Now

JPMorgan and other big U.S. banks will kick off earnings season on Friday. Let's look at the charts after a fantastic multi-month run.

JPMorgan Chase  (JPM) - Get JP Morgan Chase & Co. Report and other stocks in the banking sector have done quite well lately.

Often considered a best-in-breed holding, JPMorgan shares have risen 13% so far this year and just more than 50% since the end of the third quarter.

A few of JPMorgan’s peers have also done well, with Morgan Stanley  (MS) - Get Morgan Stanley Report and Goldman Sachs  (GS) - Get Goldman Sachs Group Inc. (The) Report both up more than 50% since the start of the fourth quarter.

Bank of America  (BAC) - Get Bank of America Corporation Report, Wells Fargo  (WFC) - Get Wells Fargo & Company Report and Citigroup  (C) - Get Citigroup Inc. Report have risen nicely as well.

However, there is a concern about the group rallying too hard into earnings, which will kick off on Friday when JPMorgan reports before the open

For instance, with Thursday’s rally, JPMorgan has been up for eight straight sessions, climbing 14.2% in less than two trading weeks.

JPMorgan, Goldman Sachs and Wells Fargo are holdings in Jim Cramer's Action Alerts PLUS member club. Want to be alerted before Jim Cramer buys or sells JPM, GS or WFC? Learn more now.

Trading JPMorgan Chase

Daily chart of JPMorgan stock.

Daily chart of JPMorgan stock.

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A stock displaying relative strength vs. the rest of the market is not necessarily a bad thing.

However, when a stock rallies hard into an event like earnings, it can create a sell-the-news reaction. Even a flat reaction is considered a good reaction given this type of run.

On a dividend-adjusted basis, JPMorgan stock is just now pushing back through its prior all-time high, which was achieved in January 2020.

From here, I would really like to see some digestion. Preferably, bulls will get a buy-the-dip setup along the way. For instance, a pullback to the 10-day moving average would at least be a start.

Below that and JPMorgan can begin to fill some gaps, with one at $132.75 and another at $126.25.

Ideally, we will get a dip down into the $122 to $128 area. Admittedly, that’s a wide range, but there is plenty of support in that area should it get there. Specifically, there’s the 10-week and 21-day moving averages, the 78.6% retracement and VWAP support.

On the upside, eventual upside targets may include $150, followed by the 123.6% extension near $156.20.

Let’s not be so short-sighted that we forget last year’s price action. That’s when the banks surged from the October lows and peaked in early January. For JPMorgan, it peaked the morning it reported earnings and has taken a year to get back here.

Granted, there was a global pandemic in between and just because it happened last year doesn’t mean it will this year. But it’s something to keep in mind.