JPMorgan Chase & Co.'s (JPM) Post-Earnings Rally to Record Highs Could Have Legs

JPMorgan Chase & Co. (JPM) hit a fresh record high after beating earnings expectations

Jan 13, 2017 at 11:11 AM
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JPMorgan Chase & Co. (NYSE:JPM) was among the major banks that reported earnings this morning, unofficially kicking off the fourth-quarter earnings season. And like several of its peers, JPM stock is on the rise, after the financial firm surpassed both top- and bottom-line expectations. Specifically, the shares have tacked on 1.2% at $87.30, after earlier notching a new all-time high of $88.17. But with optimism toward the stock still far from peak levels, there could be more room yet for JPM to run.

Thus far, no analysts have weighed in on JPM's earnings beat, but the equity could certainly stand to benefit from some upbeat attention. Despite the stock's huge post-election rally, and a series of higher highs, more than half of the brokerage firms tracking JPM still recommend holding or selling the shares. Plus, the average 12-month price target of $87.59 sits at a discount to today's peak.

Elsewhere, short interest on JPM fell in the most recent two-week reporting period, and represents a mild 1.1% of the stock's total float. But that reading may not be as bullish as it seems, given that short interest is coming off its highest level since January 2014, and is still in the 96th percentile of its annual range. Simply put, there's more room for bearish bets to unwind, potentially giving JPM a boost.

Looking to the options pits, there are signs optimism has been picking up. For instance, JPM's 10-day call/put volume ratio of 1.70 at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) ranks higher than 90% of the past year's readings.

However, the security's Schaeffer's put/call open interest ratio (SOIR) of 2.20 tells a different story, as put open interest more than doubles call open interest among options in the front three-months' series. Moreover, this ratio sits just 3 percentage points from an annual put-skewed high. While it's possible some of this put action has come at the hands of shareholders looking to protect their paper profits, heavy accumulations of underfoot put open interest could serve as support.

Technically speaking, JPM has given shareholders little to complain about of late. Up 50% year-over-year, the stock has outperformed the broader S&P 500 Index (SPX) by 20 percentage points over the past three months. Plus, the shares have found a foothold at the 20-day moving average, which kept JPMorgan Chase & Co. (NYSE:JPM) afloat even after its post-election rally stalled late last month.

JPM Daily Chart January 13

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