The US earnings season is in full swing and delivering a couple of upsides like JP Morgan (NYSE: JPM), which beat analyst estimates over the fourth quarter. Even though they set aside a provision of $2,3 billion for bad loans, revenue growth came in at 18% as the higher interest rate environment pushed up their net interest income by 48%.
Earnings per share rose to $3,57, compared to $3,33 in the previous year, further exceeding expectations. The investment bank also warned investors of the deteriorating market outlook for 2023 as the bank predicted a fourth-quarter recession. However, with a healthy amount of credit reserves, JP Morgan might be well prepared to weather the storm.
The price action saw a significant increase in value after the earnings release, which resulted in the price breaking through the $138.55 resistance level. This resistance level, acting as current support to the price, will be watched closely in the coming days. If support does not hold and the bears take control, it is possible to see lower prices targeted at $132.50 and $128.00 a share, respectively.
Considering that short interest on JP Morgan is very low at 0.58%, the bull case could see the price move higher from the $138.55 support level to the next significant resistance level of $143.55. If more buyers enter the market, the possibility exists that the price might move higher to the estimated fair value price of $148.59 a share.
As the US recession looms and customer loan defaults loom, we could possibly see a retracement to lower levels, which brings the $132.50 and $128.00 support levels into focus. The possibility does exist that the bulls could drive prices higher to $143.55 and $148.62 a share over the long term.
Sources: Koyfin, TradingView.
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