Naughty Flicks

Skip NavigationMarketsBusinessInvestingTechPolitics & PolicyVideoWatchlistInvesting ClubPROLivestreamMenu(See the video above for Frank’s complete chart breakdown.) JPMorgan Chase (JPM) is among the major financial stocks kicking off earnings season next week, and its technical set-up deserves attention following several weeks of underperformance across the sector. On the weekly chart, JPM is testing a critical uptrend line that also represents the lower boundary of an upward-sloping channel dating back to its 2022 low. The stock has tested this support line several times over the past four years, with each visit producing a meaningful rebound. The most recent occurred in April. With earnings approaching, the key question is whether JPM can once again respect this support level and begin another advance. The magnitude of the recent decline also provides some perspective. JPM is currently trading roughly 10% below its 52-week high, placing this pullback among its larger drawdowns of the past several years. While a few declines have extended toward 15%–20%, those have been relatively uncommon. Outside of major market disruptions, including April’s tariff-driven sell-off, buying JPM after a 10% decline has generally been more rewarding than selling into weakness. That historical tendency is worth considering, regardless of the immediate reaction to next week’s earnings. Finally, JPM’s performance has implications beyond the stock itself. As the second-largest holding in the Financial Select Sector SPDR Fund (XLF), behind Berkshire Hathaway, JPM plays an important role in the sector’s direction. A 10-year relative performance chart comparing JPM with XLF shows that the stock has outperformed the broader financial sector for much of that period. One notable exception occurred from late 2021 through late 2022, overlapping with the SPX bear market. A successful rebound from JPM’s long-term support line would be constructive for the stock, but it could also provide an important boost to XLF. Given financials’ influence on the broader market, that makes JPM’s reaction to earnings particularly important to watch. Frank Cappelleri is the founder and president of CappThesis , an independent research firm that helps active investors through time-tested chart and statistical analysis. Prior to starting CappThesis, he spent 25 years on Wall Street as an equity sales trader, technical analyst, research sales specialist and desk strategist. DISCLOSURES: (None) All opinions expressed by the CNBC Pro contributors are solely their opinions and do not reflect the opinions of CNBC, or its parent company or affiliates, and may have been previously disseminated by them on television, radio, internet or another medium. THIS CONTENT IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSTITUTE FINANCIAL, INVESTMENT, TAX OR LEGAL ADVICE OR A RECOMMENDATION TO BUY ANY SECURITY OR OTHER FINANCIAL ASSET. THE CONTENT IS GENERAL IN NATURE AND DOES NOT REFLECT ANY INDIVIDUAL’S UNIQUE PERSONAL CIRCUMSTANCES. THE ABOVE CONTENT MIGHT NOT BE SUITABLE FOR YOUR PARTICULAR CIRCUMSTANCES. BEFORE MAKING ANY FINANCIAL DECISIONS, YOU SHOULD STRONGLY CONSIDER SEEKING ADVICE FROM YOUR OWN FINANCIAL OR INVESTMENT ADVISOR. Click here for the full disclaimer.Read More