Blue-chip bank stock JPMorgan Chase (JPM) is nursing an 8% deficit in September, cooling off from its Aug. 30 all-time high of $225.48. Last seen lower today to trade at $206.99, it might be time to buy the dip, if past is precedent, as this pullback has JPM encountering a historically bullish trendline.
The trendline in question is the shares’ 100-day moving average and per Schaeffer’s Senior Quantitative Analyst Rocky White, JPM has run into this trendline seven times in the last three years. For the purpose of this study, White defines that as the equity trading above the moving average for 80% of the time over the past two months and closing north of the trendline in eight of the last 10 sessions before getting within striking distance of the moving average.
JPMorgan stock averages a 5.9% return one month later after those pullbacks, with a win rate of 71%. A move of similar magnitude would put the equity nearly filling its September bear gap, and back within striking distance of record highs.
Longer term, JPM is up 21.6% in 2024 and showed resiliency yesterday, recovering quickly from its drop following the redefined Basel rule. The $200 level is also currently a stone’s throw from its 120-day moving average, a trendline similar to its 100-day, where the last six pullbacks have resulted in a 4% pop a month later to go with a 67%-win rate.
The options pits show a shift toward puts. JPM’s 10-day call/put volume ratio of 1.05 on the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) sits in the elevated 88th percentile of its annual range, suggesting a healthier-than-usual appetite for bearish bets of late.
Echoing this, the security’s Schaeffer’s put/call open interest ratio (SOIR) of 1.09 sits in the elevated 79th percentile of its annual range. Should the bank stock bounce back, there could be an unwinding of these bearish bets.