JP Morgan stock price: supported by inflows from regional banks
JP Morgan (NYSE: JPM) stock price crashed to a multi-month low of $127.92 last week as Silicon Valley Bank (SVB) collapsed. It then pared back some of those losses and closed at $133.65. The stock remains about 7.57% below the highest point this year.
JP Morgan to benefit from SVB collapse
JP Morgan, and other too-big-to-fail banks like Bank of America and Citigroup, are expected to benefit from the collapse of SVB, Signature Bank, and Silvergate Capital. The bank, thanks to its strong balance sheet and importance to the American economy will continue thriving.
Most importantly, the collapse of these regional banks will see most of them move their funds to big banks like JP Morgan. Last week, most companies who were moving their money did so to JP Morgan and other large banks.
Another reason is that JP Morgan is highly regulated. Like other big banks, it is subjected to regular stress test, which it has passed for more than a decade. Additionally, the company is well-diversified, with a strong presence in key sub-sectors like investment banking and wealth management.
JP Morgan has a solid balance sheet. The most recent financial results showed that the company’s investment portfolio had $629 billion, which is pretty solid. These funds are allocated to AFSS and HTMS and have a credit rating if AA+.
Most importantly, JP Morgan has made a better investment decision than Silicon Valley Bank. SVB’s collapse happened because the company invested deposits to long-dated bonds, which are now underperforming.
Still, the reality is that banks fail when there is no confidence in their operations. This happens when there is significant fear that the bank will not honor its depositors. JP Morgan seems to be having the opposite, with more people moving their money to the company.
JP Morgan stock price forecast
The daily chart shows that the JPM stock price found a strong resistance at $145, where it failed to move above this year. And last week, it made a bearish breakout below the ascending trendline shown in black. The stock moved below all moving averages and the key support at $129.81, the highest point on May 31. Therefore, I suspect that the stock will continue rising as buyers rotate from regional to too big-to-fail banks. If this happens, the JP Morgan stock price will likely rise to about $145 in the coming weeks.
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