Buying signs appearing on American Express chartsAMEX(NYSE:AXP)
A continued comeback in the travel business and solid buying trends among younger consumers helped American Express beat profit forecasts Friday. The company reported net income of $2.1 billion, or $2.73 per share, compared with $2.2 billion, or $2.74 per share, versus consensus of $2.40 per share. American Express AXP total revenues, +3.58 percent, were $11.74 billion, up from $9.06 billion a year ago. This was in line with analyst estimates of $11.62 billion. Amex continues to expect full-year revenue growth of 18 to 20 percent and earnings per share of $9.25 to $9.65.
Lets look at the chart of American Express Company. The STRAC indicator works very well when applied to the chart of this stock. The price has recovered from its low every time it fell below the indicator for the past six times. The indicator makes trading this stock extremely easy if history repeats itself. Traders can make a good profit within 2 weeks if they were to buy the stock whenever the price breaks below the lower band.
Next, there are many good indicators from Sharechart that you can use to determine the strength of the current downtrend in American Express Company stock. The lines within the Random Walk Index indicators, the Aroon indicator, the Elder Ray indicator, and the Kling Volume Oscillator indicator are all widely used. It is not just one, but four different indicators that send a common message that the downtrend is indeed overextended and thus the probability of a rebound is high.
The ShareChart scanner also detected a “Double Top” looks alike chart pattern that formed from the first week of March to early May. This chart pattern looks like a “Double Top” chart pattern although it does not exactly meet all the conditions of a “Double Top” chart pattern. Nevertheless, the chart pattern is useful in determining the potential price target for the current trend.
If we measure the distance between the high and the neckline of the “Double Top” chart pattern and project it down, the 100% downside target is about $154.55, as shown on the chart. This coincided with the lowest bar on the chart on 12 May 22. This is another sign that the price hit a short-term low on that day.
Assuming a trader would buy this stock at the current price, he can next use ShartChart’s Fibonacci indicator to determine the next upside potential. Using the Fibonacci indicator to measure the distance between the high and low the downtrend yields a 50% retracement value of about $171, as shown on the chart. This is the immediate price target for the rebound. The next target could be around $176, which is the 61.8% Fibonacci retracement value.
Next, the Sharechart “Volume Profile” indicator (VP) can be used to determine if 1.) the current price is considered oversold and 2.) the upside price target explained above is likely to be reached.
First, the VP indicator shows that the value reached its lowest level on May 12 as shown by the blue horizontal line on the chart. This indicates that the price may have bottomed out on that day.Similarly, the price had bottomed and reversed trend on November 30 last year when the value of VP reached the lowest level.
Secondly, the red line of VP indicator shows that the value was around $174, which means that the traded volume was the highest of the last 6 months. This should serve as a resistance level or price target in the event of a recovery. This also coincided with the 50% to 61.8% Fibonacci retracement level as explained above.
If history repeats itself, a trader who buys around the current price and sells at the potential target price of about $174 could make a good profit of 15% within the next two weeks.
Next, if we set the stop loss at $150, which the lowest points on the chart, we get a good risk-reward ratio of 174. A value above 100% is considered a good.
Before we decide to buy the stock, let us look at recent developments at American Express. On Thursday, the company continued to raise its APR in response to the Federal Reserve raising its benchmark interest rate. With the Federal Reserve planning to gradually raise the federal funds rate through 2022, it is unlikely that this will be the last APR hike this year.
American Express has also taken steps to improve security by partnering with Google to make shopping easier with an added layer of security. When using Chrome and Android Autofill.
To gain market share, American Express will now allow cardholders to cancel a flight for any reason.
While the world is full of uncertainty, the results are in line with the ambitious development goals we discussed earlier this year.”
After the results were announced, Chief Financial Officer Jeff Campbell said he still does not think there will be a recession.
