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Asset Watch

Bank your bucks at JPMorgan?

Thursday July 4, 2024

As Q2 earnings season unfolds in the weeks ahead, JPMorgan reports its results on Jul. 12. And after passing the U.S. Federal Reserve’s annual ‘stress test,’ management said they’re raising the quarterly dividend from $1.15 per share to $1.25 per share and launching a new $30 billion share buyback program.

 

JPMorgan CEO Jamie Dimon said, “The strength of our company allows us to continually invest in building our businesses for the future, pay a sustainable dividend, and return any remaining excess capital to our shareholders as we see fit.”

 

So, with the largest bank in the U.S. expecting the lending environment to remain constructive, should you position for further upside?

 

On the one hand, JPMorgan remains in an uptrend and bounced off its 20-week moving average in April and June 2024. The strength propelled the stock to higher highs, and the recent dividend and share buyback announcement only increased investors’ optimism.

 

On the other hand, momentum continues to decelerate. In mid-to-late 2021, JPMorgan made two higher highs while its weekly RSI made two lower highs (after the first vertical white line). The bearish divergence culminated with a breakdown below the 20-week MA, and the 2022 bear market that struck the S&P 500 took over afterwards.

This time around, the price action is similar. While a drop of the 2022 magnitude is highly unlikely, the stock has made two higher highs (May and June), while its weekly RSI has made two lower highs (after the second vertical white line).

 

JPMorgan may be due for a pullback, and bulls should place their stop-loss orders slightly below the 20-week MA (near $195) to protect against a larger drawdown. But if it holds above the 20-week MA, a long position is justified.

 

Will JPMorgan’s earnings release confirm the CEO’s recent optimism, or could it be a bearish catalyst for the stock?


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