Each week we share with you a trading pattern that we use consistently on our desk. Like most successful traders we have measured the win rate for this trade. In short we are giving you an intraday trading pattern that works. In this SMB Trade of the Week we will share with you a Resistance Trade in JP Morgan, stock symbol JPM. Perhaps you can make this trading pattern your own.

Let’s set up the trade:

JPMorgan Chase & Co., the second- biggest U.S. bank by assets, said profit rose 76 percent, buoyed by a $6.3 billion reduction in provisions for soured mortgages and credit-card loans from last year.

A 7.6 percent decline in revenue prompted some to question whether the profit report masked weakness in JPMorgan’s main businesses.

a) On our long term charts 40.80 was a technical resistance level.

b) In the premarket 40.80 showed resistance.

c) When we opened JPM could not trade above 40.80.
d) The tape showed weakness at 40.80.
GMan, our Head Trader, had the best results on our desk with this trade as he aggressively shorted this resistance level. GMan covered some at 40 and held some for a continuation of the downmove.

When we make trades we use three factors to make our trading decisions: intraday fundamentals, technical analysis and Reading the Tape. There was some negative news with a decrease in revenues from JPM. The tape showed weakness. And this was a technical resistance level on our intraday and long term charts. This was an excellent risk/reward shorting opportunity for us.

This is a Resistance Trade in JPM. Perhaps you can make this trading pattern your own. If you have any questions about this trade please send me an email, tweet, or post a comment on our blog. Please check out SMB University on StockTwits TV this week as we discuss in more detail trading JPM after its earning announcement. Also for active traders Brian Shannon from AlphaTrends and the SMB team will be holding a workshop on July 31st at our trading headquarters. We hope to see you there!