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Can JPMorgan Kick Off a Bullish Bank Run on Earnings?

JPMorgan will kick off earnings season on Tuesday. How will the stock react? Let's look at the charts.

JPMorgan Chase  (JPM) - Get JPMorgan Chase & Co. (JPM) Report is often considered a best-in-breed bank stock, which is why investors will be looking for the company to be a leader as this earnings season kicks off.

JPMorgan will report earnings on Tuesday before the open along with Citigroup  (C) - Get Citigroup Inc. Report and ahead of others like Bank of America  (BAC) - Get Bank of America Corp Report, Wells Fargo  (WFC) - Get Wells Fargo & Company Report and Goldman Sachs  (GS) - Get Goldman Sachs Group, Inc. (GS) Report.

Unlike the S&P 500, which has made new 52-week highs, JPMorgan and the banks continue to struggle.

While off the lows, plenty of technical damage remains. Investors will look to see if management is less cautious than it was in the summer and if the consumer is looking better or worse from three months ago.

If investors like what they hear, it could trigger a nice move higher for JPMorgan and its peers this quarter. If not, it could put bulls in a tough spot as we progress through the fourth quarter.

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Daily chart of JPMorgan stock.

Daily chart of JPMorgan stock.

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Surprisingly, when the rest of the market was pulling back in the first half of September, JPMorgan stock held steady. The decline in tech was spilling over into the indices, but not into the financials. However, the group couldn’t hold up forever.

JPMorgan stock ended up selling off in the second half of September and testing down into range support near $90.

Since testing into support, JPMorgan stock has rebounded sharply, reclaiming the 20-day and 50-day moving averages in the process. It also reclaimed and is holding the $100 mark as we await the quarterly results.

Now in the middle of two significant areas, I want to see how the stock reacts to earnings.

On the upside, I would like to see JPMorgan clear the 200-day moving average and 50% retracement at $105.70. Above the latter also puts JPMorgan stock above the August highs.

A close above that zone opens the door to the $112.50 area, where shares find the 61.8% retracement and June highs.

On the downside, bulls want to see the 20-day and 50-day moving averages hold as support. A close below will put a retest of the September low in play at $90.54, followed by range support near $90.

A break of the 23.6% retracement at $89.33 would be concerning.