The JPMorgan (NYSE:JPM) traded higher yesterday, hitting a new record high at 142.71. Then it retreated somewhat. Overall, the stock continues to trade above the upside support line drawn from the low of Oct. 29, and thus, we would consider the broader outlook to be positive.
Today, ahead of the US open, the bank reports its earnings results for Q4 2020 with expectations pointing to an EPS of USD 2.72 on USD 28.18bn in revenue, compared to USD 2.57 on USD 34bn in Q4 2019. An upside surprise is likely to cause the stock to gap up, perhaps into unchartered territory, while a disappointment is likely to result in a gap down. That said, if the price stays above the aforementioned upside line, we would expect investors to take charge again, perhaps near the low of Jan. 8, at 134.00, or near the aforementioned upside line.
Taking a look at our short-term oscillators, we see that the RSI runs above 70, and just turned up again. However, there is negative divergence between this oscillator and the price action. The MACD, although well within its positive territory, lies fractionally below its trigger line. Both indicators detect strong upside speed, but the divergence in the RSI and the fact that the MACD is below its trigger line, suggest that a small setback may be possible before the next leg north.
Nonetheless, in order to abandon the bullish case, we would like to see a dip below 128.00. This would take the stock below the pre-discussed upside line and may initially target the 124.00 zone, marked by the low of Jan. 5. If that barrier does not hold, then its break may lead the share price down to the 118.00 area, which provided decent support between Nov. 30 and Dec. 18, which if also gets broken, may pave the way towards the low of Nov. 12, at 112.00.