Boston, MA 09/26/2014 (wallstreetpr) – JPMorgan Chase & Co. (NYSE:JPM) (Closed: 60.15, Down: 2.40%) had one of the largest down days in quite a while. Just this week, it registered a new life time high at $61.85, being among the few large caps to create new highs frequently. The daily candle formed was a perfect bearish Marubozu, with a lot of downside implications. The volume spiked a bit at 16.3 million against the average of 12.8 million, suggesting a fair amount of selling interest coming at the higher levels, probably to book profit.
The price is testing a small channel support, created by projecting a parallel of the trendline connecting the August high of $59.95 and the September high of $61.85, but the break of the trendline connecting the August low of $55.64 and the September low of $58.78 can’t be ignored.
Actually the entire price action from the March 2014 bottom of $52.97 to this recent high of $61.85 can be seen to be contained within a big ascending channel and the price has oscillated around the upper boundary in September but has failed to close above it convincingly so far.
Last March, the stock hit the high at $61.48 and the next month, a high at $61.29. last week, the high was registered at $61.85 and the high of this week so far has been $61.64, which is not looking likely to be crossed by the end of this day. All these data clearly shows the sellers emerging from the $61-$62 area.
A glance at the indicators suffices to show the huge negative divergence visible on the daily MACD Histogram. The last time this was seen, a drop of 6-7 dollars materialized and a repetition would give us a tentative target of $56-$57, which coincides with a Monthly trendline support.
So the investors may stay away from the stock now and wait for a dip to $57 or $56 to accumulate it.