JPM JP Morgan Chase Daily Chart W Pattern Trading Fiasco

JPM chart shows the happier times, the green W pattern that formed in the Fall. When a W forms under both the 50 and 200-day MA's it is a strong and powerful force. Many technicians key on W patterns as a major portion of their trading. The W was not below the 50-day MA but was below the 200-day MA. The breakout occurred in January-February at the 37 level. Thus, the bottom was 28 so 37 gives a nine point move targeting 37+9 = 46 which was achieved in textbook fashion. The April top was decided by the rising red wedge and negative divergence shown by the indicators; all the readership here should now be well versed on identifying divergences. So the smack down occurs in April.

On April 23, the small circle, there was news that JPM was adjusting their trading models but most holders of JPM, which are the majority of funds, were not paying attention. Afterall, CEO Dimon is the best banker on Wall Street, the best manager of risk the markets have ever seen, right? Wrong. Dimon is like all the rest. On May 10, the small circle, JPM announced the news of the two billlion trading losss, that may eventually balloon to five billion since the sharks are now in the water, resulting in the gap down price failure. Imagine the surprise by Wall Street managers as their JPM core position plummeted like a penny stock.

From 46 to 32 is a 14 point drop, -30%, a phenomenal drop for such a beloved and trusted stock. Truly one of the red-letter dates in trading this year thus far. There are two gaps in this current price zone, the 33-ish gap was just filled. A 32-ish gap remains open. Note the indicators all making lower lows (marron lines), weak and bleak, signaling that after some type of dead cat bounce, a lower low in price should be expected before any bottoming can be projected. Perhaps a sideways range thru 30-34 will now develop. Bullish holders of JPM better hope for this outcome since if this range does not occur moving forward, price will move lower to the 27-28 area. This information is for educational and entertainment purposes only.  Do not invest based on anything you read or view here. Consult your financial advisor before making any investment decision.