4 Trade Ideas For JP Morgan
Dragonfly Capital | Jan 30, 2017 08:20AM ET
Here is your Bonus Idea with links to the full Top Ten:
JPMorgan Chase & Co (NYSE:JPM), started higher out of consolidation after the election, like all financials. And like all financials it stalled in mid-December. After a month of tight daily ranges, holding over the 20 day SMA and under that resistance, it fell two weeks ago. That took the price outside of its Bollinger Bands® and it moved sideways for a week, until it got back inside and touched the 50 day SMA. Last week it started back higher, and finished at the prior resistance.
As it enters the week momentum is strong. The RSI is rising and bullish and the MACD is about to cross up, its own bullish signal. A push above the resistance would give a target on a Measured Move to 93. There is resistance at 87 and then free air above. Support lower comes at 85.70 and 83. Short interest is low under 1% and the company is expected to report earnings next on April 13th.
Weekly options expiring February 3rd show a large open interest on the call side above at the 91 and 91.5 strikes. This could draw the price higher this week. But for February monthly options the biggest open interest is at 85 below, with some size at 87.5 and 90 on the call side. The April options, expiring after earnings, show the call side open interest growing from the 85 Strike to a peak at the 92.50 strike, with the 85 and 77.5 strikes large on the put side.
JP Morgan, Ticker: JPM
Trade Idea 1: Buy the stock on a move over 87 with a stop at 85.
Trade Idea 2: Buy the stock on a move over 87 and add a February 86.5/85 Put Spread (53 cents) for protection while selling a March 10 Expiry 91 Covered Call (53 cent credit).
Trade Idea 3: Buy the March 82.5/87.5 Bullish Risk Reversal ($1.20).
Trade Idea 4: Buy the February 87.5/90 Call Spread (79 cents) and sell the February 85 Puts (64 cent credit).
After reviewing over 1,000 charts, I have found some good setups for the week. These were selected and should be viewed in the context of the broad Market Macro picture reviewed Friday which heading into February saw the Equity markets continuing to look strong, especially on the intermediate charts.
Elsewhere look for Gold to continue lower while Crude Oil churns over support. The US Dollar Index continues lower but may be bottoming while US Treasuries are biased lower. The Shanghai Composite is resuming its drift higher, but will be closed until Friday while Emerging Markets work higher.
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Volatility looks to remain at abnormally low levels keeping the bias higher for the equity index ETF’s SPDR S&P 500 (NYSE:SPY), iShares Russell 2000 (NYSE:IWM) and PowerShares QQQ Trust Series 1 (NASDAQ:QQQ). Their charts show real strength continuing in the intermediate term. Shorter term the QQQ has been the leader but is getting a bit overheated, while the SPY and IWM may be ready to start higher out of consolidation. Use this information as you prepare for the coming week and trad’em well.
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