Hi Shoppers,
I have a great trade idea for you for next week.
JPMorgan Chase (JPM) has been sliding since mid-August. On Thursday, the sellers ran out of steam, and I like this stock for a rally next week.
The drop started at the August 13 high of $366.50. By Thursday's low of $335.28, the stock was down over 31 bucks.
A big chunk of that damage came Tuesday. Bank stocks sold hard on worries that AI will cut into their business, and JPM fell from $352 to $340 on heavy volume. The selling swept through the whole sector.
The business underneath still looks strong. Last quarter, JPMorgan booked $21.2 billion in net income, and its trading desks grew revenue 35 percent.
Thursday's candle is a change-in-trend dragonfly doji (a candle with a long lower tail that closes near the top of the day's range). Bears stayed in control down to a certain price level, where buyers entered the market and shorts covered. The stock rallied back and closed near the high of the session.
That bit of uncertainty is all it takes for a change in the trend. It kind of shows you who's in control, buyers or sellers.
Friday gave us confirmation. JPM opened at $340.77, above Thursday's close, and pushed past $343. It held our median line (the center line of my pitchfork, a trendline tool that maps where a stock tends to find buyers and sellers) and it's trading back into the next channel (the price band between my pitchfork lines).
The analysts' targets sit well above mine. Wells Fargo raised its target to $390 on Thursday, and Jefferies still has $365 even after trimming it over consumer-credit concerns.
The calendar helps, too. JPMorgan doesn't report earnings until October 13, so there's no report to blindside this trade next week.
The top of the channel is my price target at $347.89. That's still below Monday's close of $352.04, before the sector sell-off. Use a close below $340.75 as your stop loss (the level where you exit if the trade goes wrong).
Thank you for reading. Have a wonderful weekend, everyone. Make lots of money out there and be on the lookout for a trade.
Licia Leslie