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.
Besides the quadruple witch expiration on Friday, the main focus of the market this week is the Federal Reserve Bank meeting on Wednesday.
Investors are anxiously awaiting whether or not Jerome Powell is finally willing to address the threat of higher inflation and begin to hike interest rates or at least temper the massive inflows of cash to the markets.
The sector most sensitive to rising and falling interest rates is the banking sector. Therefore, the recent price action in JPMorgan Chase & Co. (NYSE:JPM) makes it the PreMarket Prep Stock Of The Day.
Having A Good Year: While much of the S&P 500 index roared off their March lows and ended positive for the year, JPMorgan did not. In fact, it was red for the year by 9%, falling from $139.40 to $127.07.
It has played catch-up in 2021. Even with its recent retreat, the stock is higher by 22% at $154.50. At its peak last week, it was actually higher by 32%, which is an unusual return for such a stodgy issue.
Recent Price Action: Based on the recent price action in the issue, the Street doesn't think a rise in rates is imminent; if so, the issue would be going in the opposite direction. The issue made its all-time high on June 2 ($167.44) and posted its all-time closing high on June 4 ($166.44).
Interestingly, the issue has been lower in the last seven consecutive sessions (including Tuesday), with half of the decline over the last two days. On Monday, the issue shed $2.72 ($160.27 to $157.57) and is lower by $2.68 at $154.88 as of 1:45 p.m. EST.
Banks Stance On Rates: On Monday during a press conference, CEO Jamie Dimon made it clear the bank is “effectively stockpiling” cash instead of buying Treasuries or other investments of that nature. The primary reason being because the potential of higher inflation will force the Federal Reserve to boost interest rates sooner than they had anticipated.
Moving Forward: Since it's impossible to predict exactly what the Federal Reserve will do now or in the future, it's difficult to base the future price of the issue based on any of those assumptions.
However, the issue can be analyzed from a technical perspective. One thing for certain is that the losing streak will come to an end. Based on its prior price action from mid-January, the issue did have an eight-day losing streak falling on a closing basis from $141.17 to $127.86 and then turned higher in five of the next sessions.
Any rebound will now be met with sellers, however, either long-term investors who are looking to redeploy their assets or from late buyers to the rally looking to scratch or eke out a small profit. Monitoring the velocity of the rebound will give some indication of whether or not it's a dead cat bounce.
Based on the daily lows in the issue, the next major area of support area would be in the $150-$153 area. The reason being, the issue posted seven consecutive lows in that area from April 26-May 4.
The discussion on JPMorgan and the upcoming Fed meeting from Tuesday’s show can be found here:
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