JPMorgan Earnings Preview: How to Trade This Best-in-Class Stock

JPMorgan will report earnings on Tuesday. What are the charts saying ahead of the report?
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In March, it seemed like the market would fall off a cliff. Now in July, bulls have been in firm control for a while now. As JPMorgan Chase  (JPM) - Get Report gears up for earnings, will bulls retain control?

Earnings have the potential to drive stocks either higher or lower and ending a recent rally or accelerating it.

Considered by many to be the highest-quality name in its sector, JPMorgan will look to set the tone when it reports its second-quarter results on Tuesday before the market opens.

It won’t be alone, though. The bank will be joined by other companies reporting earnings before the open, including Wells Fargo  (WFC) - Get Report, Citigroup  (C) - Get Report and Delta Air Lines  (DAL) - Get Report, among others.

Interestingly, JPMorgan and Wells Fargo were both recently upgraded

There are clear disconnects between the stock market and the economy, but investors will get a better idea of how the latter is holding up after we hear from JPMorgan’s management team.

Let’s look at what the charts are telling us ahead of the report, (here's a preview for Delta, by the way). 

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Trading JPMorgan Stock

Daily chart of JPMorgan stock.

Daily chart of JPMorgan stock.

The most prominent takeaway from chart above is that bulls are doing well, but not dominating in JPMorgan like they are other areas, like tech.

JPMorgan stock is above the 50-day and 100-day moving averages. It’s also above the 23.6% retracement and the trend is working in its favor (via uptrend support, which is the blue line on the chart).

Shares consolidated nicely between $91 and $93 for about two weeks as well, before moving higher and reclaiming some of these key marks. 

On a bullish reaction, bulls need to see JPMorgan reclaim and hold the $100 level. That will put shares above the 38.2% retracement, but more importantly, a bullish reaction to what’s unlikely to be a great quarter will be — you guessed it — a bullish development.

How bullish would it be that bears couldn’t crack JPMorgan stock on a subpar earnings result?

A move over $100 unlocks further upside levels, mostly between $107 and $115. Near the former it finds the 50% retracement, while the latter comes into play near the 61.8% retracement and the June highs. In between, is the 200-day moving average near $112.

On the downside, see that JPMorgan stock finds support between $88 and $90. There it finds uptrend support and the 23.6% retracement. Below it would technically put the May low in play at $81.60.