Blue-chip bank stock JPMorgan Chase (JPM) is saddled with a 5% deficit in December and pacing for a fifth-straight daily loss, as it continues to cool off from its Nov. 25 all-time high of $254.31. Shares are marginally lower this afternoon, last seen trading at $237.61, and it might be time to buy the dip. If past is precedent, then this most recent pullback has JPM trading near a historically bullish trendline.
The trendline in question is the shares’ 50-day moving average and per Schaeffer’s Senior Quantitative Analyst Rocky White, JPMorgan Chase stock ran into this trendline five 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.
The stock averaged a 4.3% return one month later after 60% of said pullbacks. A move of similar magnitude would put the equity near $248, back within striking distance of record highs.
Adding to the bullish case, the security’s 14-day relative strength index (RSI) of 20.9 is deep in “oversold” territory, which is typically indicative of a short-term bounce. Plus, JPM’s Schaeffer’s Volatility Scorecard (SVS) stands at a high 81 out of 100, indicating the stock exceeded option traders’ volatility expectations in the past 12 month — a boon for premium buyers.