A number of fundamental analysts have bumped up their opinion of American Express ( AXP) . We favored the long side of AXP on November 9, writing "Traders could remain long AXP from our earlier recommendation. Keep stops at $169 still. Our price targets are the $222-$228 area and then $300."
Unfortunately our recommendation was stopped out in late November. Do we get back in or sit things out? Let's check the charts again.
In this daily bar chart of AXP, below, we can see that buyers finally showed interest in AXP around $150. The $160-$150 area was retested twice since the early December low. Prices are rallying above the 50-day and 200-day moving average lines but we do not have a clear closing above the early January highs to turn the trend positive.
The On-Balance-Volume (OBV) line has been in a decline since late June and only shows a minimum of new strength in recent days. The Moving Average Convergence Divergence (MACD) oscillator is trying to stay above the zero line.
In this weekly Japanese candlestick chart of AXP, below, we can see a large bullish engulfing pattern. This is a fairly reliable reversal pattern based on personal experience but the pattern appears in a sideways trend versus in a downtrend. Reversal patterns need something to reverse and a sideways trend typically does not count. We'll see.
The weekly OBV line is more positive looking than the daily line. The MACD oscillator is above the zero line and narrowing so we may see a new buy signal here. More positive looking than the daily oscillator.
In this daily Point and Figure chart of AXP, below, we can see a potential upside price target of $221.
In this weekly Point and Figure chart of AXP, below, a price target of $218 is shown. A little less than the daily chart which is not the "norm".
Bottom line strategy: Multiple sell side firms upgrading a stock can be a powerful influence. The $64,000 question is whether AXP can overcome some chart resistance from October/November in the $180-$190 area. Traders who anticipate a breakout could go long AXP here but risk only $165 if the rally fizzles.
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