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PreMarket Prep Stock Of The Day: JPMorgan

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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.

The fourth-quarter earnings season kicked off on Friday with reports from a few of the large U.S. banks. One of those is JPMorgan Chase (NYSE: JPM) and is the PreMarket Prep Stock Of The Day.

Fall From Grace: After ending 2019 at $139.40, JPMorgan followed the market higher in January making a new all-time high at $141.10. It managed to maintain that area in early to mid-February, but began to retreat with the broad market and ended that month at $116.11.

Its ultimate low during the March meltdown came on the same day of the S&P 500 index on March 23 at $78.09. That low came in well above its November 2016 low ($67.74) and just below its December 2016 low ($80.65).

Muted Rebound Until November: While the S&P 500 index quickly distanced itself from its March lows, many of the banks were slow to respond. In fact, shares of the issue could have been purchased under $100 as late as Nov. 4, when it put in a daily low at $98.93.

It rallied to end the month at $117.98 and rallied to end the year at $127.07. Interestingly, the issue just made a new all-time high on Thursday at $142.75 and posted its all-time closing high at $141.73.

Q4 Beat: Before Friday's open, the company announced fourth-quarter EPS of $3.79 versus a $2.62 estimate and revenue of $29.20 billion versus a $28.7 billion estimate. Also, investment banking revenue came in at $2.5 billion, up 37% year over year and markets and securities services revenue was $7.2 billion, up 18% year over year.

Volatile PreMarket Trading: Off the release of the headline numbers, the issue spiked down to $136.41 and then quickly rebounded to $143.24, which was just above its all-time high on Thursday ($142.75). It was unable to maintain that lofty level and began to drift lower into the opening bell.

Volatile Price Action During The Regular Session: After a $4 lower open, the issue immediately bottomed at $137.01 and embarked on a robust rally. The rally came to an abrupt end just above Thursday’s all-time closing high ($141.17) at $141.65 and reversed course once again.

As of 1:30 p.m. ET, it has pulled back to mid-$139 handle.

Moving Forward: On many occasions, the closing price for an issue on the day of an earnings report can be a good barometer for the future course of price action in the issue. In addition, when an issue makes a new all-time high or all-time closing high at the time of its earnings report can add further significance to the price action on the day the report is announced.

In the case of JPMorgan, with those levels being put in place on Thursday, investors have a very significant level(s) to focus on to determine if the rally will continue. That being Thursday’s all-time closing high price ($141.17), which comes in just below the current high in Friday’s session of $141.65. If the issue can clear that level on a closing basis, there is limited resistance on the charts.

If unable to clear the level, investors may choose to take on the issues run.

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