Medium term
Trade view / 21 June 2016 at 8:39 GMT

American Express stock looks lower

Trader /
United States
Instrument: AXP:xnys
Price target:
Market price:

Shares of financial stocks including those of financial services company American Express Company (AXP:xnys) have come under renewed pressure in recent days after a weak rally attempt in May on the back of a pretend-hawkish Fed. The path of least resistance looks lower for AXP stock.

The hawkish tone and threat of interest rate hikes sooner rather than later in May by Federal Reserve officials spooked many a chart-chasing trader into blindly buying financial stocks. At the latest when Fed chair Janet Yellen flipped this switch and sounded much more dovish at the June meeting, those traders saw those very stocks they chased higher turn red again and it has been ugly ever since.

Shares of American Express as a result of the steep rally off the February lows by April had bumped into a big former horizontal line of resistance which by May also lined up with the diagonal resistance line off the 2014 highs. So far, this confluence area of technical resistance is holding strong and it looks to be good reward to risk for traders to lean against this area on the short side.

American Express shares enjoyed brief rally in May
American Express Co
Source: Saxo Bank

Over on the daily chart, we see that diagonal resistance now also lines up with the red 200-day simple-moving average but that the blue 100-day moving average held as support last week. Any break below last week's lows near the $60 area, particularly on a daily closing basis would confirm more downside into the mid $50s. Also note that last week, AXP stock broke below its February uptrending channel.

APX stock broke below the February uptrending channel
American Express Co
Source: eSignal

Management and risk description

From a risk management perspective, any sharp bullish reversal in AXP stock back higher and particularly back above its red 200-day moving average would not only call off the bear side but may set up a new bullish trade.


Entry: sell/short the stock or CFD at the latest upon a break below $60.

Stop: $63.50.

Target: $55.

Time horizon: 2-5 weeks.

— Edited by Martin O'Rourke

Non-independent investment research disclaimer applies. Read more
vsquare007 vsquare007
What do you think about AXP debit spread option at 62.5/60 for $100 premium with 1 contract with 24 days to expiry as option trade idea ?
FRivera FRivera
24 june 2016: Trade 61,5 - sl 63,5.


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