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May 31, 2010.

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Thursday, May 6, 2010

JP Morgan Chase (JPM) - A Good Candidate to Short?

JPM has just broken 200D MA support and looks like a good short candidate in May. In addition, the cloud is still very dark in the financial sectors on top of the "Sell in May & Go Away" sentiment.

Things to watch:
  • Whether JPM can stay above 200D MA. If not, the next immediate support will be $40.923. If this 61.8% FR level support is broken too, JPM will be very bearish and starts the down trend.
  • If JPM bounces back from 200D and breaks the 50D MA resistance at about $44.00, the bull will be coming back.
I have entered my JPM SEP 43 PUT position and will be watching very closely these two levels.

8 comments:

  1. If you zoom out of the chart, there is a valid trendline that is touched at middle of Apr 2009, early July 2009, early Feb 2010.
    JPM is currently sitting on that trendline and the stochastic oscillator is oversold.
    So "No", I don't think this is a good candidate to be short, yet.

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  2. Thanks for another view. I saw the trend line!

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  3. FYI: When there is multiple criss-crossing of MAs and price, it means that the market is non-trending. For non-trending market, trading decision should not be made based on MA. Instead, should use "classical" TA of trendlines, support, resistance and chart patterns to drive the analysis. In the above chart, the 40.90 level was tested several times both as a support and a resistance. That 40.90 level should be treated with respect. The 13-month-old primary-trend trendline should also be treated with respect.

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  4. Congrats! JPM opened with a gap down and blasted right through the support and trendline. But a hammer was formed, and it might turn out to be a Morning Star reversal. A bullish reversal on the trendline is not inconceivable.

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  5. Hope this support turns to resistance...

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  6. I'm in the same boat with you.
    I shorted JPM last night right at the edge of the downtrendline.
    My target to cover is $29.94.

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  7. RL, welcome to the party! What is your time frame of your PUT option? Today the up trend support turned resistance.

    ReplyDelete

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