The Ghost Of JP Morgan
Dragonfly Capital | Apr 24, 2017 07:38AM ET
Here is your Bonus Idea with links to the full Top Ten:
JP Morgan (NYSE:JPM), was a daunting figure at the beginning of the 20th century. It would not have been fun to have that guy yelling at you. It almost looks like he dressed intentionally to intimidate. So is it even scarier when his ghost is telling you to buy his stock? I’d say so. And it seems he has a good point.
The stock started higher in November after the election and paused after a quick 17% move higher. After a short consolidation it made a second leg higher to consolidation in mid-December. The in February it made a third leg up, ending with a gap up to start March. Since then it has been pulling back. Last week saw the price sit at the bottom of the prior consolidation range, finding a bottom.
The RSI is testing the 40 level but the MACD is about to cross up, a buy signal. There is resistance at 86 and then 87 followed by 89 and 91 before 92.50 and 94. Support lower comes at 84.25 and 83.10. Short interest is low at 1.0%. The company is expected to report earnings next on July 14.
Options activity shows very large open interest this week at the 80 Put and then spread from 85 to 88.5 on the Call side. May monthly options open interest is biggest at 82.50 and 85 on the Put side and at 85 then equal at 87.5 and 90 on the Call side. June open interest is biggest by far at the 90 Calls. Finally in the July chain, the first after the next earnings report, are biggest above the current price on both the Put and Call side, at 85 and 90.
JP Morgan
Trade Idea 1: Buy the stock on a move over 86 with a stop at 84.25.
Trade Idea 2: Buy the stock on a move over 86 and add a May 12 Expiry 84.5/82.5 Put Spread (90 cents) then sell a July 92.5 Covered Call (57 cent credit).
Trade Idea 3: Buy the May/June 87.5 Call Calendar (67 cents) and sell the May 80 Puts (55 cent credit).
Trade Idea 4: Buy the June 85/90/92.5 Broken wing Call Butterfly ($1.50).
Elsewhere look for gold (NYSE:GLD) to pause in its uptrend while crude oil (NYSE:USO) continues to pull back lower. The US dollar Index remains moving sideways in broad consolidation while US Treasuries (NASDAQ:TLT) continue to look better to the upside in the short term. The Shanghai Composite has morphed into a consolidation with a downward bias short term and Emerging Markets (NYSE:EEM) are pulling back in their uptrend.
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Volatility has moved up slightly from abnormally low levels to a more normal range but still low which continues to keep an upward push on the equity index ETF’s SPY (NYSE:SPY), IWM (NYSE:IWM) and QQQ (NASDAQ:QQQ). Their charts look stronger in the short term, with the QQQ and IWM stronger than the SPY, but with all three consolidating near their highs and strong in the intermediate term. Use this information as you prepare for the coming week and trad’em well.
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