Technical analysis

Week 1 Stock watch 2024

By Antreas Themistokleous

04 January 2024

3055

As week one of 2024 kicks off with a stock market surge, two stocks stand out as ones to watch.

JP Morgan Chase & Co

Shares in JP Morgan Chase and Co (symbol ‘JPM’) experienced a notably aggressive bullish rally beginning in late October, achieving an approximate 20% gain in just 2 months. JPM is expected to release its earnings report for the quarter ending December 2023 on Friday, January 12, before the market opens. The consensus estimate for earnings per share is $3.64, compared to the result for the same quarter last year of $3.57.

As of September 30, 2023, the net income of the bank has increased by 37% year over year. Meanwhile, the current ratio is at 90%, indicating that any short-term turmoil could potentially have a significant impact on the company's operations. From a dividend perspective, the yield is currently at 2.34%, which is viewed positively by shareholders, making the company's shares somewhat more attractive.

On the technical side, the price has been exhibiting steady bullish momentum for the last 2 months and is on track to surpass its all-time high of $171.78, set on October 22, 2021. The Stochastic oscillator has been in the extreme overbought level for a prolonged period, while the price is trading above all technical indicators, potentially indicating a correction in the sessions leading up to the earnings release. On the other hand, the 50-day moving average is trading above the slower 100-day moving average, validating the overall bullish trend in the market.

Bank of America

Bank of America Corporation (symbol ‘BAC’) saw its share price rise by around 22% in the last quarter of the year, offsetting the losses incurred in the previous quarter. The company is expected to report its earnings for the fiscal quarter ending December 2023 on Friday, January 12th, before the market opens. The consensus EPS for the quarter is $0.68, compared to the result for the same quarter last year of $0.85.

Bank of America had a steady increase in net income throughout 2023, with debt comprising only 10% of its total liabilities. Although these factors might suggest a strong balance sheet, the current ratio tells a different story. At just 83%, the company may struggle to repay its short-term liabilities with its current assets. This could be a deciding factor for some investors when considering diverting their capital into the company.

From a technical analysis perspective, the price has maintained a steady bullish trend in recent months and is currently testing the support level at the 61.8% Fibonacci retracement level on a weekly basis. The Stochastic has been indicating extreme overbought levels for about 2 months, while the bullish momentum appears to be slowing. These factors suggest a potential near-term correction to the downside. The first area of possible support might be around the $32 price area, which aligns with the 50% Fibonacci retracement level and the internal support area from price reactions in early August. A second potential support area could be the $30 price level, marked by the lower band of the Bollinger Bands, the 50-day moving average, the 38.2% Fibonacci retracement level, and also representing a psychological support level due to its round number.


This is not investment advice. Past performance is not an indication of future results. Your capital is at risk, please trade responsibly.


Author:

Antreas Themistokleous
Antreas Themistokleous

Antreas Themistokleous is a trading specialist in Exness. He is a Certified Financial Technician since 2018. As a member of the Society of Technical Analysts, Antreas is implementing advanced use of indicators and patterns to conclude in an action plan for different trading strategies.