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:

DraftKings on the Verge of Another 40% Decline

It’s been almost three and a half months since we examined DraftKings stock in October, 2020. The share price was hovering near $57 after a strong run from $10.60 to over $64 in just several months. The regulatory environment in the U.S. seemed to be warming up and many analysts hurried to issue their BUY…

Read More »

AMN Healthcare Stock to Suffer a 2020-Like Drop

AMN Healthcare Services provides workforce and staffing solutions to healthcare facilities in the U.S. The company is relatively small with a market capitalization of less than $4 billion. However, small companies can make for excellent returns if one happens to identify the winners. And indeed, between late-2011 and early-2020, AMN stock from under $4 to…

Read More »

Zoetis Stock Getting Ahead of Itself, Invites Correction

Based in Parsippany, NJ, Zoetis Inc. is an animal medicine and vaccine developer and manufacturer. The company went public in 2013 and has been enjoying steady growth since. With the stock currently above $160 a share, Zoetis holds a market cap of nearly $80 billion. For a profitable and growing company like Zoetis, a rising…

Read More »

CBOE Stock Looking Good After a Record Year

CBOE Global Markets Inc. is an equities, options and futures exchange operator in the U.S. and Europe. The company traces its roots back to Chicago in 1973, when it practically invented options trading in its present form. CBOE is literally part of the very infrastructure of modern financial markets. So it is not surprising that…

Read More »

Novo Nordisk Bulls Have an Elliott Wave Problem

Novo Nordisk A/S is a Danish pharmaceuticals major with a market cap of over $160 billion. People need their medication even in recessions, so the company’s business wasn’t as affected by the 2020 crisis as most other industries. Novo Nordisk remains a top-notch pharma with consistent profits and revenue and no debt whatsoever. And the…

Read More »

Lockheed ‘s Correction Still Unfolding as Expected

Almost a year and a half ago, in July 2019, we wrote that Lockheed Martin is likely “setting the stage for an unpleasant surprise.” The stock had just reached a new all-time high and was trading at $370 a share. Optimism was in the air and analysts were more bullish than ever. An indeed, fundamentally,…

Read More »

Campari Bulls to Get a Serious Hangover Soon

Campari is an Italian liquor and spirits maker with traditions dating back to 1860. The company’s stock price plunged sharply in March along with the markets in general and then recovered just as quickly to new records by year-end. As shares hover near all-time highs, however, dark clouds appear to be gathering over the spirits…

Read More »

More analyses