JPM’s Rally Has A Powerful Tailwind

One of the more useful tells in this market right now is not simply which stocks are making new highs, but which ones are doing it while widening their lead over the S&P 500. That is exactly what has been happening with J.P. Morgan Chase & Co. (JPM), which has broken to fresh all-time highs multiple times in recent weeks while maintaining a clean bullish trend structure, with short-, intermediate-, and long-term moving averages stacked in the proper order and price holding above all of them. What really separates JPM from an ordinary breakout, though, is its relative strength: since a short-term trough in late May and early June, JPM has steadily outperformed the S&P 500, with its relative-strength line making higher highs and higher lows and recently reaching new highs of its own. That combination of price leadership, trend alignment, and improving relative strength is the kind of tape behavior we look for when identifying the strongest bullish setups in the market.

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There are two straightforward ways to frame the trade, depending on how much leverage you want: owning JPM shares provides direct participation in a continued move higher, while a slightly in-the-money call can provide greater upside exposure with less capital committed upfront, although it also carries expiration risk. For traders looking for a defined-risk approach, a call or other defined-risk structure can keep the potential loss limited to the amount invested while preserving participation if the stock continues its advance. As a hypothetical example, if JPM were to gain 10% by the option’s expiration, the slightly ITM call described here could be on track for a 158.7% profit potential!

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Wishing You the Best in Investing Success,