JPMorgan Chase & Co. (NYSE:JPM is trading higher on Tuesday after releasing its third-quarter earnings report. The stock broke its recent downtrend last week.
This may be a bullish dynamic. The shares could be entering a new uptrend. This is why we have made JPMorgan the Stock of the Day.
Most people think the market offers no guarantees. For the most part, they are correct.
But there is one. And it’s that the trend will eventually change.
Markets are always trending. They are either going up, down, or sideways. Inevitably, the trend will change.
Traders use trendlines to help determine if a trend has changed.
The first thing a stock trending lower needs to do before it goes higher is stop falling. If it reverses or goes sideways, it will cross a downtrend line on the chart.
As you can see, JPMorgan crossed the downtrend line. This could mean that the bulls have taken control from the bears. A new uptrend may have formed.
The shares found support at $325. This wasn’t a coincidence. This level was support in June and July, and there tends to be support at prices that have been support before.
This is because of seller’s remorse.
People who sold around $325 regretted doing so after the shares rallied. Some decided to buy their shares back if they could eventually get them for the same price they were sold for.
When JP Morgan returned to this level, they placed buy orders. The large quantity of these orders created support.
Stocks can rally after they reach support. This is because of anxious and impatient buyers.
They start to raise their bid prices so the sellers come to them. Other anxious buyers do the same. This can result in a bidding war that forces the shares higher.
JP Morgan broke its recent downtrend. A new uptrend may be forming.
JPM Price Action: JPMorgan shares were up 1.24% at $338.45 during premarket trading on Tuesday, according to Benzinga Pro data.
Photo: Skorzewiak / Shutterstock
