The J.P. Morgan Dilemma

JC Parets
January 15, 2019

When it comes to stock market bellwethers, I can think of very few that are as important as J.P. Morgan Chase. If you look at a chart of the S&P500 going back decades and a chart of the JP Morgan, they look exactly the same. This brings me to our current dilemma. As J.P. Morgan goes, so goes the rest of the market right?

If that's the case, then this stock market has its work cut out for it. $JPM broke some serious support levels last month that have kept it below overhead supply, and that's a problem for the bulls.

First of all, here is a short-term chart of J.P. Morgan and the S&P500. They move together:

Here is a longer-term look, showing the rolling 52-week correlation:

So what's the dilemma?

Well, $JPM broke below last year's lows, essentially confirming a double top. With prices below that former support as well as a downward sloping 200 day moving average, one thing we know for sure is that this is not an uptrend:

This chart screams retest of the breakdown doesn't it?

Here is what it would likely look like if this is indeed just a retest of that breakdown last month:

Is that what this is? Or is $JPM going to work itself off through time instead, and stocks continue higher? Something like this:

I still think this is a 50 & 57 market. We're watching closely and executing accordingly.

Let me know what you think

JC

 

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