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American Express Company Message Board

  • luckyone581 luckyone581 Feb 5, 2013 10:54 AM Flag

    AXP Chart Evaluation & Sell Mention

    AXP Friday Closing Price 59.91

    AXP made a new 63-month high 4 weeks ago, above the previous intra-week high made in April at 61.42 (60.17 on a weekly closing basis) with a rally up to 61.97 and a weekly close at 61.24. Nonetheless, the stock did not confirm the breakout having closed the following week at 59.78 (below the previous high weekly close), giving a failure to follow through signal in the process. For the past 2 weeks, in spite of the strength in the index market, the stock has been unable to generate a close back above 60.17 and now with the decent probability that the index market might find a top this week, the probabilities seem to favor the stock heading lower.

    It should be mentioned that AXP does show previous resistance in the low 60's having gone up to 62.50 in Dec06 and up to 63.63 in Oct07. The all-time high for the stock was made on Jul07 at 65.89. It should also be mentioned that from all those highs, including the previous one at 61.42, a drop down to the $53-$55 level was seen, suggesting that if the stock once again fails to go higher that a drop of at least $5-$7 will be seen.

    AXP did gap down between 60.58 and 60.28 on January 18th after its earnings report. The earnings came in as expected but guidance was down and the rally stalled off of the news. The gap is likely to be closed as the news was not negative, just not as good as other financial companies reported. Nonetheless, closure of the gap is not likely to generate any new buying as resistance levels will be decent to perhaps strong above the 61.00 level. By the same token, the stock also shows a gap on the way up between 57.48 and 58.31 that probably has the same probability of being closed.

    To the upside, AXP shows decent resistance at the previous intra-week high at 61.42 and then again at the high seen prior to the earnings report at 61.97. Further resistance is found at 62.50 and 63.63. To the downside, the stock shows support between 58.70 and 58.81 but the probabilities are high that support will be broken as there are multiple lows (3) in that area. Further support will be found at the bottom of the gap at 58.31 but should the stock get down to that area the probabilities would favor the gap getting closed and a drop down to at least the 200-day MA, currently at 57.45, occurring. Further and stronger support will be found between 55.88 and 56.14. Strong support is found between 53.02 and 53.20.

    AXP is likely to rally up to close the upside gap this coming week, and in the process generate a successful retest of the recent 61.97 high. By the same token, if the indexes do not make new all-time highs it is unlikely that the stock will go higher and the downside gap will become a magnet likely generating a drop down to the downside objective of $53-$55.

    Sales of AXP between 60.58 and 61.42 and using a stop loss at 62.07 and having an objective of 55.00 will offer a 4-1 risk/reward ratio.

    My rating on the trade is a 4 (on a scale of 1-5 with 5 being the highest).

    My name is Tony and I am a retired chartist. I have been trading for over 36 years. In the 80's I was a broker/trader/analyst for Merrill Lynch, Dean Witter, and Pru-Bache.

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    These are some of the questions that I try to answer through chart evaluation.

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83.30-0.83(-0.99%)Jan 26 4:00 PMEST

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