Price Action Shows Cracks In JPMorgan Uptrend As Risk Looms
Shares of J.P. Morgan (JPM) have maintained an upward trend for the last two years and appear to be maintaining that trend for now, but subtle indications in the price action whisper that trouble might lie ahead for the company and its share price. This trouble could manifest itself as part of the upcoming earnings call, posing a significant risk to the share price.
A technical analysis of the weekly chart shows three technical factors investors should take note of: trend deceleration, increased volatility, and relative under performance of the share price.
As the trend of a stock’s price matures, prices rise at typically slower and slower rates. It isn’t a troubling sign that JPM shares aren’t going up as fast as they used to as long as the reduced rate of ascent is accompanied by a fundamental explanation–which there seems to be.
It is no secret that increased regulations on major banks have reduced the profitability of several operations within these organizations; however, it is what the bank has done to address this matter that becomes a concern for investors. Notice in the figure above that the year-to-year comparison (green line to yellow line), shows a marked slowdown in the rate of growth in share price. This despite the fact that the stock’s P/E ratio is low, around 11, at a time when the average S&P 500 stock is trading at prices with a 19 P/E ratio
Price Action Shows Cracks In JPMorgan Uptrend As Risk Looms
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