JP Morgan Leads Financials with Breakout and New High

Banking stocks are leading the market on Wednesday and JP Morgan is leading the sector as one of the first of the big banks to hit a new high. I featured the Regional Bank SPDR (KRE) and the Bank SPDR (KBE) in ChartWatchers this weekend and JPM has the same chart pattern working. After a Brexit-induced swoon in June, the stock recovered sharply and broke above its May high with a gap-surge in early August. The stock corrected most of September with a falling flag and broke flag resistance with a surge above 67 today.

Note that I am drawing internal trend lines to mark the flag. An internal trend line cuts through a spike high or an intraday low. Trend lines are not "hard" resistance levels anyway and I used them mostly to define patterns. The falling flag is a bullish continuation pattern and the breakout signals a continuation of the July-August advance. It is positive to see the finance sector leading the market because it is the third biggest sector in the S&P 500 (13.2%). In addition to the flag breakout, MACD turned up and moved above its signal line.

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