This past week AXP got up into a 3-month congestion area from July-Sep of last year when the stock reached the $42 level. The congestion area is between 35.50 and 42.50 and it is unlikely the stock will be able to get above this level without the indexes heading substantially higher.
AXP finds itself overbought and with no support of consequence until the $35 level is reached. Any pause of momentum will likely generate some profit taking and liquidation of long positions.
On a weekly closing basis, resistance is decent at 42.19. On a daily closing basis, resistance is decent to strong between 41.44 and 41.57, and again at 41.79. On a weekly closing basis, support is minor at 38.95 and at 38.04. Support is decent to strong at 36.61. On a daily closing basis, support is minor at 39.50 and then nothing until the 50-day MA is reached currently at 36.05.
In 2008, between June 27th and Sep 26th, AXP traded basically between a daily closing high of 42.19 and a low of 35.37. Having reached 41.98 last week, it is probable that some profit taking as well as short selling has begun to be seen. With the indexes possibly having found a top for at least the next 6-8 weeks, it is probable that the stock will also see a pause and some type of correction from these levels.
This year, between Sep 16th and Nov 4th the 35.85 to 36.44 level proved to be a strong resistance level. Nonetheless, that level was broken on November 4th and since then the stock has basically moved straight up. If the stock has found a temporary top, retest of that breakout level will likely happen. Keep in mind that such a retest is normal, even within the context of a bull trend for the longer term.
Sales of AXP between 41.61 and 41.98 and using a stop loss at 42.60 and having an objective of a drop down to the 50-day MA, currently at 36.05 (likely to be around 36.50 in a week) will offer a risk/reward ratio of 5-1.
My rating on the trade is a 3.5 (on a scale of 1-5 with 5 being the highest probability).
My name is Tony and I am a chartist. I have been trading for close to 30 years. In the 80's I was a broker/trader/analyst for Merrill Lynch, Dean Witter, and Pru-Bache.
I offer an inexpensive chart evaluation service on stocks of your choice through membership to my newsletter, website, and message board.
“When or where do I get in? When or where do I get out? What is the trend for the next week? For the next 3 months? Where are the strong buyers and where are the strong sellers (based on past action)? What is the risk/reward ratio on my trade (based on chart objectives)? What looks good right now (chart-wise)?”
These are some of the questions that I try to answer through chart evaluation.
I offer a monthly service that includes a weekly newsletter with chart evaluations on 4 stocks that I believe have attractive chart patterns and good risk/reward ratios as well as 1 chart evaluation per week on a stock of your choice. Evaluations include entry and stop loss points as well as likely objectives. The service also includes membership to a message board where daily updates on all stocks and stock indexes are given. Cost of the service is only $27.95 per month. A 2-week Free Trial is offered. If you want a lesser package, I do offer one for $4.95 that only talks about the Stock Indexes.
If you are interested in learning more about the service, please check out my website address on the Yahoo message board profile area.