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JPMorgan Earnings Preview: How the Chart Views the Stock

JPMorgan will report earnings before the open on Friday. With financials trading well, bulls are hopeful for new highs. Here are the levels to know.

Delta Air Lines  (DAL) - Get Delta Air Lines, Inc. Report unofficially kicked off earnings season by reporting before the open. Those shares are up on the day and investors are hoping it’s the start of a solid couple of weeks. 

We’ll find out soon enough: JPMorgan  (JPM) - Get JPMorgan Chase & Co. Report reports results Friday morning. The big New York bank will be joined by Wells Fargo  (WFC) - Get Wells Fargo & Company Report and Citigroup  (C) - Get Citigroup Inc. Report as well.

The companies are reporting at a time where bank stocks are trading pretty well too.

While the Federal Reserve is talking about raising interest rates and putting many stocks under pressure, bank stocks have held up pretty well. Of course, it makes sense as higher rates make the banks more profitable.

Earlier this week, Goldman Sachs said it expected four rate hikes this year. JPMorgan Chief Executive Jamie Dimon says there could be more.

As long as the markets don’t get crushed, rising rates could be a huge catalyst for the bank stocks. One analyst believes 2022 should be a big year for the group.

Let’s hope they start on the right foot, and that starts with earnings.

Trading JPMorgan Stock

Weekly chart of the JPMorgan stock.

Weekly chart of the JPMorgan stock.

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While the rest of the market is searching for direction, JPMorgan stock is working on its fourth straight weekly gain. It's also above all of its major weekly moving averages.

The 50-week moving average was solid support in late December, while the bounce helped create an upward channel.

Obviously, earnings reports create a sort of binary event. Good results can put new highs in play, while an ill-received report could send a stock lower.

On a bullish reaction to earnings, let’s see how JPMorgan stock handles the $173 level, which is the fourth-quarter high.

If the stock can clear that mark, then the $175 to $176 zone is in play, which is channel resistance. Above both zones and the $180 to $181 area will be my next focus, which is the 261.8% extension.

On the downside, my key focus would be the 10-week and the 21-week moving averages. Put simply, Do bulls step in and defend the stock down here if JPMorgan pulls back that far?

If not, support is followed by the 50-week moving average, then channel support.

While many investors are cognizant of buying the dip, they should be equally cognizant of the risk for selling the rip or selling the news — particularly with bank stocks.

Over the years, these stocks have had a tendency to rally on earnings, then fade after the open. That doesn’t mean it happens every quarter, but it’s a trend I have noticed over the years with these stocks.