JPMorgan Chase & Co. (NYSE:JPM) stock is down 11 percent year to date. And as it gears to report first quarter results, investors are hoping that strong earnings will provide the much needed catalyst for shares to move higher.
Shares ended Tuesday at $59.33, up 2 percent for the session.
JPMorgan Chase Stock is Struggling to Find Some Direction
A look at the daily price chart of JPMorgan shows the stock has been in a down trend since the end of 2015. Shares fell to a low of $53 in February, post which, they have been largely range bound. $61 has proved to be a strong resistance zone over the past couple of months. As such, those wishing to enter in to the stock in the event of a positive earnings surprise, should wait for a convincing close above $61, before initiating long trades.
In case the quarterly numbers turn out to be weaker than expected, traders can go short below $57. Ari Wald, senior technical analyst at Oppenheimer & Co., reckons the odds of a breakout to the upside are slim, not just for JPM, but the banking space as a whole, given Fed’s reluctance to raise interest rates.
Wald notes that banking stocks tend to perform well when rates rise, making it difficult to endorse them in the current monetary environment. “Banks remain troubled…and should be avoided,” he says. “We see it as concerning that the KBW Bank index is showing signs of turning lower below its multi-year break down point.”
Financial Select Sector SPDR (XLF) and Financial Services Select Sector SPDR (XLFS) have lost 5 percent and 8 percent respectively this year.
To see a list of high yielding CDs go here.
Investors have Tamed their Expectations from JPMorgan Chase
JPMorgan Chase is scheduled to post Q1 results before the start of trade on Wednesday, with a majority of analysts expecting the country’s biggest bank to record its first y-o-y earnings dip in five quarters.
According to analysts surveyed by FactSet, earnings are likely to come in at $1.26 per, down from $1.45 per share in the year ago period. The consensus EPS estimate stood at $1.54 at the end of last year.
Total revenue is projected to fall 6 percent to $23.41 billion, from $24.82 billion a year ago. However, net interest income is forecast to increase to $11.3 billion from $11 billion in the same quarter last year, according to FactSet.
The average rating of analysts covering the stock is the equivalent of “overweight,” with a 12-month target price of $70.04. Shares of JPMorgan Chase & Co. (NYSE:JPM) fell 2 percent after posting Q4 results on January 15, and 2.5 percent on October 14 following Q3 numbers.