JP MORGAN SHARES HAVE A LITTLE ROOM TO RUN BEFORE BUMPING INTO A CEILING

JP Morgan Chase

investors are hoping that the upside seen over the last two weeks is just the beginning of a longer-term rally and not just a flash in the pan. With earnings already reported for the most recent quarter, the short-term for JPM will likely be driven by interest rate movements and general market sentiment. Let's take a look at the fundamentals and technicals of JP Morgan to get a feel for who may have an edge in the never-ending battle between the bulls and bears. What the bulls see in JP Morgan… • Cheap valuation metrics: o A price-to-book ratio of 1.06 o A price-to-sales ratio of 2.42 • A great net profit margin of over 23% • Over $1 trillion in cash equivalents that trumps total debt of only $665.83 billion • A Treasury-beating dividend yield of 2.7% What the bears see in JP Morgan… • A P/E of 10 – which does not seem as cheap as it does on the surface when considering the 2015 estimated growth in revenues and EPS of 4.1% and 8.6% • Technicals that – as of Wednesday's close – still present JPM with some hurdles to clear before all the lights are green for a more substantial rally The technical take on JPM… Technicians note that JP Morgan shares – like many of the other financial companies' shares – have bounced nicely off of the bottom over the last two weeks but are now facing multiple layers of key resistance. The first two potential ceilings come in at $60.40 and $61.85. Possible support / buy points on the downside come in at $54.96 and $52.97. Overall… JP Morgan would be much more desirable for the bulls on a successful test of the recent lows between $54 and $55. Buying up here just below resistance puts the reward / risk ratio heavily in favor of the bears. Any close above $61.85 will quickly shift the burden of proof over to the bears.