This is a double take on JP Morgan, using Yahoo and Globe & Mail charts (see also previous blogs). As always the charts can be enlarged by clicking on them! JPM is arguable the most prominent US financial institution having once played the role of quasi central bank. Where it goes should tell us a thing or two about where the US financial system as a whole goes.  EW is  invariable full of nasty ambiguities which makes the counting of the sequences difficult. In this case we have a long triangle or a short one. These constructs occur only in 4th waves or B waves (including the B within a B-wave). It has to be one or the other. In the former case , a 4th wave, the target is around $70 and the timing could be years out still. In the latter case, a B within a B-wave, the target is more like $60 and the timing is “around the corner”, that is sometime in the next year or so. Both scenarios are positive for the moment but by the same token both will become very negative down the road. Our preference, marginally, is for the B-wave triangle (in black or purple).

We did not expect this stock to trade above $45 or so because, among other things, there appeared to be a very distinct B-wave triangle (not shown). The stock failed to drop and consequently a different scenario is playing itself out. In fact there are two such scenarios. The most bullish one would have the ups and downs over the past 13 years form a single triangle wave 4 which calls for a top potentially as high as $70. The problem with this scenario is that it will probable take too long. The other scenario, which is much more in line with the market overall, also sports a triangle but a much smaller one that is a wave B within a much larger degree wave B (in blue). If C equals A in this configuration the stock would peak at just over $60, which, coincidentally would equate to the levels reached in 2000 and would form a “double top”. The entire structure from 2000 onwards would then become wave 4. Time wise this process could be complete in a matter of months, perhaps even weeks if the present central banks orgy continues to propel the market into the next bubble. There was, of course, a time that JP Morgan was itself viewed as the central bank, which may explain why it has benefitted proportionately so much more than the few other too-big-to-bail/fail financial institutions in the US. The thrust, or wave c of B requires another 4-5 as far as we can tell. To play it safe we would, if we owned the stock, start selling at around $55 or at the very least put in a close stop-loss order. Ultimately the target would be around $20 if this is indeed going to be a wave 4.

Roughly a year ago it looked like JPM had already completed, or was about to complete, a nice a-b-c counter-trend rally at around $36/$39. This obviously proved to be wrong. Instead the stock was working on a much bigger a-b-c. One cannot be entirely sure but it does fit quite well. The company reported a 53% gain in earnings today and the stock goes down in pre-market trading. This stock has now hit the upper line at least 7 times and is valued at levels reached first in 2004. The amazing thing is that despite all changes that have been made, or will be made, that the stock is still up here. A sell .

Morgan has a clear chart, furthermore Royal’s is very similar so it could be that today, maybe tomorrow, this sector peaks. The move from the December lows has been surprisingly robust but now these stocks have done what they should.