NEW DIRECTIONAL CALL PLAYS

JP Morgan - JPM - close 41.95 change +1.19 stop 39.50

JPMorgan Chase & Co. (JPMorgan Chase) is a financial holding company. JPMorgan Chase’s principal bank subsidiaries are JPMorgan Chase Bank, National Association (JPMorgan Chase Bank, N.A.), a national banking association with United States branches in 23 states, and Chase Bank USA, National Association (Chase Bank USA, N.A.), a national banking association that is the Firm’s credit card–issuing bank. JPMorgan Chase’s principal nonbank subsidiary is J.P. Morgan Securities Inc. (JPMorgan Securities), its United States investment banking firm. Its activities are organized into six business segments: Investment Bank, Retail Financial Services (RFS), Card Services (CS), Commercial Banking (CB), Treasury & Securities Services (TSS) and Asset Management (AM). Its wholesale businesses comprise the Investment Bank, Commercial Banking, Treasury & Securities Services and Asset Management segments. Its consumer businesses comprise the Retail Financial Services and Card Services segments.(source: company press release or website)

Target(s): 44.70, 46.50
Key Support Areas: 40.50, 39.75
Key Resistance Areas: 45.00, 47.00
Time Frame: 1 to 2 weeks

Why We Like It:
JPM has upward trend line support that began on July 6, 2009 and horizontal support at $40.50 dating back to August 2009. These two areas are converging and should provide strong support going forward. JPM has just experienced a 15% correction and looks like a buy here. This area also allows us to place a relatively tight stop at $39.50. JPM has some overhead SMA's it will have to deal with but should have no issues if the overall market continues its bounce from here. I suggest readers take advantage of any pullback in JPM towards the $41.00 level by buying June $42.00 calls. We are looking for JPM to retest prior highs from January, which is near our target of $44.70.

Suggested Position: Long JUNE $42.00 CALL if JPM trades near $41.10, current ask $2.31, estimated ask at entry $1.85

Annotated chart:

Entry on May xx at $xx
Earnings Date July 15, 2010 (unconfirmed)
Average Daily Volume: 46 million
Listed on May 10, 2010