close icon

JPMorgan: Risk is High After 10 Years of Bull Market

Between March 2000 and March 2009, JPMorgan Chase & Co. investors saw their holdings’ value decline by almost 78% as the stock fell from over $67 to less than $15 a share. The next ten years, on the other hand, have been a wonder to behold.

JPM stock rose like a phoenix from its ashes, climbing to over $119.30 per share by February 2018. This ~690% rally was supported by improving fundamentals in terms of rising profits and a strong balance sheet. As of this writing, the stock is not far away from its all-time high. It is fair to say that JPMorgan has never looked better.

Does this mean it is a good investment going forward? Usually, when all looks perfect complacency starts to settle in and the stage is set for an unpleasant surprise. In addition, the chart below provides an Elliott Wave reason for skepticism.

JPMorgan stock to complete an Elliott Wave impulse

The weekly chart above reveals JPMorgan’s entire uptrend from $14.96 in March 2009. It looks like a five-wave impulse, whose fifth wave is still under construction. Wave (1) – up to $48.20 – was followed by wave (2) down to the 61.8% Fibonacci level at $27.85.

The five sub-waves of wave (3) are also clearly visible. Wave 4 is a triangle, while wave 5 is the extended one among the three motive waves within wave (3). Wave (4) down has been developing during most of 2018 and culminated in the bottom at $91.11 in December.

Not the Time to Extrapolate JPMorgan ‘s Past into the Future

This brings us to wave (5), which we think is still unfolding. The recovery from $91.11 to $117.16 so far has a three-wave structure. This means wave (5) is likely going to be an ending diagonal pattern. Since truncated ending diagonals in fifth waves are extremely rare, it makes sense to expect a new all-time high above $120 in wave (5).

Unfortunately for JPMorgan bulls, when wave (5) exceeds the top of wave (3) the five-wave impulse which has been in progress since March 2009 would be completed. According to the theory, a three-wave correction follows every impulse. This means that instead of celebrating the new record high in wave (5), investors should prepare for a pullback towards the support area of wave (4) near $90 or lower.

Did you like this analysis? Similar Elliott Wave setups occur in the Forex, crypto and commodity markets, as well. Our Elliott Wave Video Course can teach you how to uncover them yourself!



Stay informed with our newsletter

Latest Elliott Wave analysis on different topics delivered to you weekly.

Privacy policy
You may also like:

Electronic Arts Can Lose 50% in Elliott Wave Correction

Electronic Arts hasn’t been able to reach a new all-time high since July 2018, when it climbed to $151.26. However, the stock came close to that last month after the coronavirus panic in March was quickly forgotten. Currently near $127 a share, Electronic Arts holds a rather high valuation at 29 times its expected fiscal…

Read More »

Buffett’s DaVita Stock Looks Like a Bull Trap

Formerly known as DaVita HealthCare Partners Inc., DaVita Inc. provides kidney dialysis services for patients suffering from chronic kidney failure or end stage renal disease. It was founded in 1994 and went public a year later. As of this writing DaVita’s market cap is close to $10.7 billion. The interesting part is that it is…

Read More »

London Stock Exchange Stock Needs a Breather

Stock exchanges are the places where the shares of publicly traded companies change hands. But sometimes we forget that the exchanges themselves are operated by a company, as well. Usually, those companies are also public with their stocks trading on the exchange, too. That is exactly the case with the London Stock Exchange Group plc.…

Read More »

Yum! Stock to Form a Base Near $75 a Share

The coronavirus selloff hit the restaurant industry hard. With stores closing to prevent the virus from spreading, the stocks of McDonald’s, Starbucks, Dunkin and the like all came crashing down. Yum! Brands wasn’t spared either. YUM stock has been losing ground since the summer of 2019, but it was the COVID-19 crisis that really scared…

Read More »

Intel ‘s Troubles Fit in its Elliott Wave Correction

2020 is shaping up as a year to forget for Intel shareholders. The stock is down over 20% year-to-date. First, the coronavirus selloff caused a 35% plunge down to less than $44 a share. And just when it seemed INTC was recovering, the company announced it will delay its 7nm products until late 2022 or…

Read More »

Expedia Stock can Surge as Travel Returns

The coronavirus pandemic hit no other sector harder than travel. Lockdowns took a heavy toll on airlines, hotels and even rental car services as people postponed vacations and business trips were cancelled. Even asset-light companies like Booking and Expedia saw their stock prices plunging. Expedia, which was down 25% from its all-time high even before…

Read More »

Plus500 Confirms Uptrend, but Correction is Likely

Based in Haifa, Israel, Plus500 (LSE:PLUS) operates a leading CFD trading platform. The company is part of the FTSE 250 index and conducts most of its business in Europe and Australia. The new ESMA regulations which came in effect in August 2018 severely impacted the CFD trading industry. As a result, Plus500 stock fell from…

Read More »

More analyses