This Expert Recommends Approaching American Express Tactically

Eagle Bay Capital founder and Market Technician JC Parets recently looked into the performance and prospects of American Express Company AXP in his Dow 30 report, and recommended approaching the stock tactically.

Weekly Chart

As it can be seen in the chart above, the stock experienced a failed breakout last June. This has generated some issues in the underlying trend. On top of the failed breakout, the company is putting in a bearish momentum divergence and relative strength broke a three-and-a-half year uptrend line.

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“These are all negatives that have suggested a sideways market, which is exactly what we've seen,” Parets explains. “Shares continue to successfully test support from the lower end of this huge range since 2013. With momentum putting in bearish divergences this entire time and relative strength breaking the uptrend from the 2011 lows, I see little reason to force this long, but with an upward sloping 200 week moving average, I see no reason to be short either.”

Consequently, the expert recommends a more tactical approach for American Express (see daily chart).

Daily Chart

Looking at the short-term, Parets says he’s spotted a few trading opportunities over the past months. However, “at this point based on the weight-of-the-evidence,” Ealge Bay wanted to be long only above the October lows for a mean reversion.

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“Based on the weekly timeframe, this is important support that was resistance back in 2013,” the analyst explains. “Aggressive longs can raise stops to only being long above the downtrend line from the Jan 21 highs.”

Parets concludes, “I'd take half off the table near 83 and the rest at 85.”