4 Trade Ideas for American Express: Bonus Idea

Here is your Bonus Idea with links to the full Top Ten:

American Express, $AXP, started up off the pandemic low and stalled as it hit the 200 day SMA. It consolidated in a symmetrical triangle for nearly 4 months until a breakdown at the end of October. That move failed and it reversed higher. From failed moves come fast moves and it gapped up over the triangle and continued to a top at the target at 130, and the gap down during the start of the pandemic, in January. It pulled back from there to support and then made a run to a new all-time high in March. Another pullback to retest the pre-pandemic high held and it reversed last week. It ended the week breaking short term consolidation, possibly prepping for the run to the Measured Move above at 174.

The RSI is breaking consolidation higher in the bullish zone with the MACD level and positive after a pullback. The Bollinger Bands® are flat and slowly tightening. There is resistance at 150.50. Support lower comes at 144 (a Fibonacci number) and 140.50 then 138 and 135 before 130. Short interest is low at 1.1%. The stock pays a dividend with an annual yield of 1.19% and started trading ex-dividend on March 31st. The company is expected to report earnings next on April 23rd.

The April options chain shows the biggest open interest at the 135 and 130 strikes lower on the put side with size above at 150. On the call side it is much bigger with size building every $5 from 140 to a peak at 160. The April 23 Expiry options include the earnings report and suggest about an $8 move by expiry for a range of 136 to 152. The open interest on the put side is spread and small. On the call side it has spikes at 145 and 152.50. The May chain has small open interest spread from 140 to 130 on the put side and from 135 to 160 on the call side with the most at the 155 call. The June chain has the biggest open interest at the 145 put and the 135 call.

American Express, Ticker: $AXP

Trade Idea 1: Buy the stock on a move over 145 with a stop at 140.

Trade Idea 2: Buy the stock on a move over 145 and add an April 23 Expiry 140/135 Put Spread ($1.30) while selling the May 160 Call ($1.25).

Trade Idea 3: Buy the April/May 150 Call Calendar (2.80) and sell the April 23 Expiry 135 Put ($1.10).

Trade Idea 4: Buy the May 135/145/155 Call Spread Risk Reversal ($1.25).

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After reviewing over 1,000 charts, I have found some good setups for the week. These were selected and should be viewed in the context of the broad Market Macro picture reviewed Friday which with the first Quarter of 2021 in the books, saw equity markets painting a mixed picture, but broadly positive.

Elsewhere look for Gold to possibly reverse out of consolidation to the upside while Crude Oil pauses in its uptrend. The US Dollar Index continues in the short term uptrend while US Treasuries are pausing in their downtrend, and possibly reversing higher. The Shanghai Composite is also looking at a possible reversal to the upside while Emerging Markets pullback in their uptrend.

The Volatility Index looks to remain very low and possibly move lower, making the path easier for equity markets to the upside. Their charts look strong on the longer timeframe, led by the SPY. There looks to be a rotation going back into the QQQ as the IWM marks time. On the shorter timeframe both the QQQ and IWM lag the SPY again with the IWM looking stronger than the QQQ on this scale. Use this information as you prepare for the coming week and trad’em well.

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The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.

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