JPMorgan Chase & Co.  (JPM - Get Report) failed at its quarterly risky level of $116.81 on April 29 after a positive reaction to its earnings report,  released on April 12. My call is to accumulate shares of JPMorgan on weakness to its annual and monthly value levels of $102.64 and $101.39, respectively. On Thursday, the stock traded around its semiannual pivot at $110.75, which is a buy level for short-term bullish traders.

Back on May 2, I suggested that investors should "sell in May and go away." The downside risk is clearly shown on this weekly chart for the SPDR S&P 500 ETF (SPY - Get Report) , known as Spiders.

The Weekly Chart for Spiders

Courtesy of Refinitiv XENITH

Investors who reduced holdings in the stock market given the downside vulnerability shown in the above chart should be considering stocks to buy on weakness.

A diversified portfolio needs a bank stock and my suggestion is the biggest money center bank in the country and the only commercial bank in the Dow Jones Industrial Average. JPMorgan is cheap, with a P/E ratio of 12.23 and dividend yield of 3.20%, according to Macrotrends. This makes JPMorgan one of the eight "Dogs of the Dow" for 2019.

In recent interviews, CEO Jamie Dimon indicated that JPMorgan is not forecasting a recession but is planning for one. The banking system is sound, but the big banks have exposures to the potential trade war with China, corporate debt refinancing, Federal Reserve tightening by unwinding its balance sheet and the uncertainties related to Brexit.

Investors should not ignore the Federal Reserve Balance Sheet. Last week the Fed reduced their balance sheet by $39 continuing its "quantitative tightening" strategy. In my opinion, this is one important cause for stock weakness in May.

On the domestic front, JPMorgan is opening new Chase branches in order to serve individuals and small businesses on Main Street, USA. Data from the Federal Deposit Insurance Corporation, FDIC, shows that JPMorgan had $2.35 trillion in assets with a well-managed loan pipeline at the end of 2018. One sidebar is that banks started to increase "reserves for losses" in fourth-quarter 2018.

The Daily Chart for JPMorgan

Courtesy of Refinitiv XENITH

The daily chart for JPMorgan shows that the stock traded to its 2019 high of $117.15 on April 29, which was shy of its all-time intraday high of $119.33 set on Feb. 27, 2018 and a secondary high of $119.24 on Sept. 20. The stock set its Dec. 26 low of $91.11 and that day was a "key reversal" as the close at $95.96 was above the Dec. 24 high of $94.22. The close of $97.62 on Dec. 31 was the first major input to my proprietary analytics.

Still in play are annual and semiannual pivots at $102.64 and $110.75, respectively. The $110.75 level was a magnet on May 9. The close of $101.23 on March 29 was input to the analytics and resulted in a quarterly risky level at $116.81, which was tested as a sell level on April 29. The close of $116.05 on April 30 was an input to my analytics and a monthly value level for May lags at $101.39.

The Weekly Chart for JPMorgan

Courtesy of Refinitiv XENITH

The weekly chart for JPMorgan is positive but overbought with the stock above its five-week modified moving average of $110.05. The stock is well above its 200-week simple moving average or "reversion to the mean" at $87.95. The 12x3x3 weekly slow stochastic reading is projected to rise to 84.08 this week up from 82.83 on May 3. A weekly close below $110.05 is a warning that additional downside is likely.

Trading Strategy: Buy weakness to its annual and monthly value levels at $102.64 and $101.75, respectively, and reduce holdings on strength to its quarterly risky level at $116.81. Its semiannual pivot is a magnet at $110.75.

How to use my value levels and risky levels:

Value levels and risky levels are based on the last nine weekly, monthly, quarterly, semiannual and annual closes. The first set of levels was based on the closes on Dec. 31. The original semiannual and annual levels remain in play. The weekly level changes each week; the monthly level was changed at the end of January, February, March and April. The quarterly level was changed at the end of March. My theory is that nine years of volatility between closes are enough to assume that all possible bullish or bearish events for the stock are factored in. To capture share price volatility, investors should buy on weakness to one of its value levels and reduce holdings on strength to a risky level. A pivot is a value level or risky level that was violated within its time horizon. Pivots act as magnets that have a high probability of being tested again before its time horizon expires.

Disclosure: The author has no positions in any stocks mentioned and no plans to initiate any positions within the next 72 hours.