4 Trade Ideas for American Express: Bonus Idea

• Posted by Greg Harmon
• on January 8th, 2024

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

American Express, $AXP, comes into the week at the highest level since March 2022 and approaching the all-time high. This is after breaking short term resistance to end last week. There is room in the Bollinger Bands® to move higher as they point up. The RSI is into overbought territory, but only barely, while the MACD is crossing down but positive. The technical picture suggests long term upward price action and short term movement higher, with the latter at risk of a momentum reset, so a pause or short term pullback. There is resistance at 192 and 195 then 198.50 and 200. Support lower comes at 186 and 181 then 178.50. Short interest is low under 1%.

The stock pays a dividend with an annual yield of 1.27% and started trading ex-dividend on January 4th. The company is expected to report earnings next on January 26th. The January options chain shows the biggest open interest at the 170 then 182.50 strikes on the put side and at the 200 then 175 call strikes. The January 26 Expiry options pricing suggest a $9.35 move between now and expiry, a range of 179.75 to 198.50, encompassing the earnings report. The February chain shows biggest open interest at the 175 and 160 strikes and at the 195 call. Finally, the March chain has the biggest open interest at the 160 put and it is spread from 160 to 210 on the call side.

American Express, Ticker: $AXP

Trade Idea 1: Buy the stock on a move over 189.75 with a stop at 186.

Trade Idea 2: Buy the stock on a move over 189.75 and add a January 26 Expiry 187.50/180 Put Spread ($2.35) while selling the January 26 Expiry 195 Call ($2.30).

Trade Idea 3: Buy the January 26 Expiry/March 200 Call Calendar ($2.80) while selling the January 26 Expiry 180 Put ($1.50).

Trade Idea 4: Buy the March 180/195/210 Call Spread Risk Reversal (60 cents).

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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 week of January in the books, saw equity markets had retrenched, seeing some profit taking into the New Year.

Elsewhere look for Gold to pause in its uptrend while Crude Oil pauses in its move lower. The US Dollar Index continues to drift to the downside while US Treasuries pullback in their uptrend, potentially in a reversal. The Shanghai Composite looks to continue the trend lower while Emerging Markets consolidate in a broad range. The Volatility Index looks to remain very low and stable making the path easier for equity markets to the upside.

Their charts continue to look strong on the longer timeframe after a digestion week in long uptrends. On the shorter timeframe the IWM, QQQ and SPY could have reset momentum measures lower in the bullish range and moved price back below the 20 day SMA for the first time in a while. If this was just a momentum reset, then it has gone far enough to watch for a reversal. If it continues then deeper moves may attack the bullishness of the longer term charts. 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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