Be Careful With American Express -- The Stock, Not the Credit Card

 | Feb 20, 2018 | 4:48 PM EST
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American Express Inc. (AXP) made a peak a little earlier than other stocks in January and tested its rising 50-day moving average line in January and broke it quickly in February. Prices bounced off of the rising 200-day moving average line but look like they are stopping short of the underside of the declining 50-day average line. Read further to see what kind of risk may lie ahead.

In this daily bar chart of AXP, below, we can see how prices have made narrow high/low ranges in the past few days. A big range day tells you that it is easy to move prices up or down. A narrow range day can imply indecision or a balance between buyers and sellers. Volume in AXP has been heavier on the decline and lighter on the rebounds. While this hasn't impacted the On-Balance-Volume (OBV) all that much it is not a bullish pattern for classical chart watchers.

The Moving Average Convergence Divergence (MACD) oscillator has crossed to a cover shorts buy signal but that may not last for long if prices weaken again.

In this weekly chart AXP, below, we can see that prices tested the rising 40-week moving average line. The weekly OBV-line shows a peak in late December. The MACD oscillator has already crossed to the downside.

In this Point and Figure chart of AXP, below, we can see that there is chart resistance from $98.39 up to $102.38. Notice the volume at price data (left scale) showing that a fair amount of volume was conducted into the highs. This can be an overhang of anxious sellers. A decline to $87.32 would likely precipitate further losses, in my opinion.

Bottom line: Traders and investors long AXP from lower levels should consider raising sell-stop protection to a close below $91 or even tighter if you wish. A close below $89, a new low close, would prompt a test of next support around $85.

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