(This is an excerpt from an article I originally published on Seeking Alpha on July 24, 2012. Click here to read the entire piece.)
I have been trying to create a shopping list of stocks for any sell-offs in the next month or so as plays on trading the final months going into November’s presidential election. As I noted in “The Positive Trade When Incumbent Presidents Run For Re-Election“, the S&P 500 (SPY) tends to perform very well in the three months before a presidential election featuring an incumbent President. On Friday, I tossed all reservations to the wind and tossed JPMorgan Chase & Co (JPM) into my basket.
JPM’s woes are well-known now and cost the company billions in market cap. When the company reported earnings on July 13th, the stock jumped to a gain of 6.0% on the day, only to lose it all within five days. By that fifth day, JPM CEO James Dimon decided to load up on 500K of common stock at an average price of about $34.20. Dimon now owns 3.2M shares of JPM common stock.
{snip}
{snip}
Source for charts: FreeStockCharts.com
From a technical perspective, JPM’s stock is not in the clear until it can break free of the downtrending resistance at the the 50-day moving average (DMA). From there, it will need to close above its 200DMA and follow-through. I bought here anyway because as far as insider purchases go, it almost never gets as good as this situation. {snip}
Be careful out there!
(This is an excerpt from an article I originally published on Seeking Alpha on July 24, 2012. Click here to read the entire piece.)
Full disclosure: long JPM, long SDS, long SSO puts