Healthy Market or Impending Doom?

JC Parets
August 1, 2019

This is the question I often ask myself. In which direction is there the most risk? Are we better off looking for stocks to buy or looking for stocks to sell? There is no need to make this complicated. Where are the probabilities of success skewed in our favor?

You're well aware by now that I spend a lot of time looking through charts in the U.S. and around the world. We have Indexes, Sectors, Stocks and other assets throughout My Chartbook. One thing I learned a long time ago is to also pay attention to the bellwethers. It's a word that gets thrown around a lot, but we take it a little more seriously around here. There are only a few of them and today I want to draw your attention specifically to what is happening in shares of J.P. Morgan.

This is a monthly chart of the financial behemoth. Here's my question: Is this a healthy consolidation within a normal uptrend? Or massive topping behavior and impending doom?

I asked this question on Twitter, because I like to get the feedback to gauge sentiment. Click the link and check out the responses for yourself:

How does this JP Morgan chart look to you guys? A healthy consolidation within a normal uptrend? Or massive topping behavior and impending doom? pic.twitter.com/Lf1TTohOSz

— J.C. Parets (@allstarcharts) August 1, 2019

The way I see it, based on the information we have up to now (Morning of August 1, 2019) there is not enough evidence here to suggest that we would rather be selling this stock. To me, the data overwhelmingly points to a healthy consolidation within a normal uptrend.

Are higher prices for JP Morgan consistent with higher stock prices in general? I'd argue yes.

Next, we want to ask ourselves if it makes sense when put into context with everything else we're seeing around the markets.

Well, the S&P500, Dow Jones Industrial Average, Nasdaq100 and a bunch of Sector Indexes all closed at new all-time monthly closing highs.

So yea, it makes sense that JP Morgan also looks like a healthy uptrend.

My bet continues to be for a healthy market, not impending doom.

Let me know what you think.

JC

 

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