As we celebrate today’s rally in the market, it’s hard not to search around for some value out there since we are in a relatively high cash position (30% at the moment), and the recent market bottom looks solid (Subscribe to Todd Akin’s Portfolio).
So, we are going to start a position in JP Morgan (JPM) here at $63.40, hoping it plays catch up with the market.
If you take a look at the chart below, JPM is trading under the all-important 200 day mavg (black line, bearish), but its downside seems minimal, as the $60.00 area has held as support in the past.
Combine the fact that JPM is 10% off of its highs ($71.00), and you suddenly have a good risk/reward scenario on your hands. Last but not least, JPM trades at under 11x earnings (CHEAP vs. the S&P 500 benchmark of 15x earnings) and yields nearly a 3% dividend. So, it’s a no-brainer, to me, to buy this stock.
As I stated above, we are taking a starting position in JPM, buying $3,000 worth here, and looking to add more shares at around the $60.00 level (recent support area on the chart). Our exit target is $70.00, and the stop loss will go in at $59.89 to cap our downside. Enjoy!