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After scanning the charts this early Monday morning, I’ve zeroed in on an investment bank behemoth in the financial industry that sometimes buys up other competitors when they get into liquidity trouble, as they just recently did during this time of liquidity credit crisis. Longer term, we would be a share buyer of this excellent company. Near to intermediate term, I’m putting a sell on it.

Short Sale: JP Morgan Chase (NYSE:JPM)

  • Closing Price Friday Aug 29. 38.49
  • Sell Entry: 38.09 to 39.18
  • Stop-Loss: 40.69 to 41.07

Take Profit Areas

  • Short Term: 34.63 to 35.18. Risk/reward of about 3:1
  • Intermediate Term: 33.70 to 34.23. Risk/reward of about 4:1
  • Long Term: 30.76 to 31.24. Risk/reward of about 8:1

Company Profile

From Google Finance:

JPMorgan Chase & Co. is a financial holding company. JPMorgan Chase's principal bank subsidiaries are JPMorgan Chase Bank, National Association, a national banking association with branches in 17 states, and Chase Bank USA, National Association, a national bank that is the Company's credit card issuing bank. JPMorgan Chase's principal non-banking subsidiary is J.P. Morgan Securities Inc., its United States investment banking firm.

The bank and non-bank subsidiaries of JPMorgan Chase operate nationally, as well as through overseas branches and subsidiaries, representative offices and subsidiary foreign banks. In May 2007, the Company acquired Xign Corporation. The business will be known as JPMorgan Xign Corporation. In January 2008, JPMorgan Chase acquired an additional equity interest in Highbridge Capital Management, LLC. As a result, the Company owns 77.5% of Highbridge as of January 31, 2008. On May 30, 2008, the Company acquired The Bear Stearns Companies Inc.

Technical Analysis

The intermediate term setup is showing a possible bottoming chart formation down to 33.70 to 34.23, which could provide an intermediate term low risk high reward reversal to the upside.

Longer term is another story, and with the current financial situations going on, we could see further downside short-term, intermediate-term, and very possible longer term. So, right now, I’m a seller of JP Morgan Chase.

Disclosure: Author holds a short position in JPM

Source: JPMorgan: Why I'm Selling Short