PreMarket Prep Stock Of The Day: JPMorgan

Benzinga's PreMarket Prep airs every morning from 8-9 a.m. ET. During that fast-paced, highly informative hour, traders and investors tune in to get the major news of the day, the catalysts behind those moves and the corresponding price action for the upcoming session.

On any given day, the show will cover at least 20 stocks determined by co-hosts Joel Elconin and Dennis Dick along with producer Spencer Israel.

For those who don't have the time to tune in live or listen to the podcast, Benzinga will highlight one stock that merits further discussion. This analysis is not a buy or sell recommendation.

While the S&P 500 posted a gain this week, not all of its top components did. In fact, one has had a pretty rough week after its first-quarter report. The company happens to be one of the U.S. largest banks: JPMorgan Chase & Co. JPM, the PreMarket Prep Stock Of the Day.

JPMorgan Turns South Ahead Of The Index

While the S&P 500 index did not peak until mid-February, JP Morgan made its all-time-high on the first day of trading in 2020 at $141.10 and its all-time closing high just one penny shy of that at $141.09. The following day, it bucked the rally in the index, falling from its previous close all the way to $138.34 on no specific news.

JPMorgan Follows The Index Lower

The isue managed to hover at the $138 area until the index began to collapse and JPMorgan  shares went along with it.

It ended the month of February at $116.11, but more pain was on the way for the longs. The crescendo of selling peaked ahead of the index by a few days, when it bottomed out on March 19 at $76.91.

That low came in between its November 2016 low ($67.74) and December 2016 low ($80.65).

JPMorgan's Muted Rebound Off The Low

The massive rally in the S&P 500 off its March low has gained back over half its losses from the February peak to the present. On the other hand, the rally in the shares of JPMorgan came up well shy of that important level of $109.

In fact, the high of the rebound was only $104.39, and it is quite some distance away.

JPMorgan's Q1 Report

The first-quarter EPS of 78 cents that JPMorgan reported Tuesday did not compare with the $1.84 estimate.

Managed sales were $29.1 billion versus a $29.67-billion estimate. 

On a positive note, JPMorgan's trading revenue was up 32%, but that was overshadowed by gross investment banking revenue that fell 16%. 

The company said it's building up a credit reserve for the upcoming recession.

JPMorgan Weak Before The Report, Much Weaker After

After ending last week's session at its recovery closing high of $102.76, sellers came in ahead of the report Tuesday morning, shaving over $4 off JPMorgan stock for a closing price of $98.15.

On the day of report, it slid to $95.50. Two days of unabashed selling took the issue to $87.03 on Thursday and it ended the session at $87.33.

A relief rally in Friday's session led the issue to close higher by 8.99% at $95.18. 

That came after its $17-plus haircut from the recovery level of $104.39 to Thursday's low. 

JPMorgan Moving Forward

For investors wanting to go long the issue, there are a few factors to consider.

First of all, the stock's trend ahead of the COVID-19 crisis was flat-to-down. Banks tend to fare better in a rising interest environment, which today's market is certainly not.

Finally, the bank itself is preparing for some defaults in loans during an expected recession. 

For investors, not fearful of a recession and hopeful for an about-face in interest rates, JPMorgan is certainly the best of breed in the banking industry, trading at a 30% discount from its all-time high. 

Photo by M.O. Stevens via Wikimedia.