American Express - What the Charts Say

American Express is rallying on earnings but not in a convincing manner. Here's what the charts say to do with the stock.
Author:
Publish date:

Shares of American Express (AXP) - Get Report were rallying on Friday, up 2.5%, but the stock is having trouble maintaining altitude with shares slipping from the post-earnings open.

American Express stock opened at $136.36, topped out at just over $138 and has since pulled back to sub-$135. On the plus side, shares are still higher by 2.5% while the broader market struggles amid more coronavirus concerns.

Even after a top- and bottom-line earnings beat, a fade from Friday’s highs shouldn’t be that unexpected. The stock has been on fire and remains overbought from a technical perspective. Others, like Visa (V) - Get Report and Mastercard (MA) - Get Report, are in a similar situation, although both have yet to report earnings.

On the plus side though, traders now have a range to trade in American Express. Let’s look at the charts.

Mastercard is a holding in Jim Cramer's Action Alerts PLUS member club. Want to be alerted before Jim Cramer buys or sells MA? Learn more now.

Trading American Express Stock

Daily chart of American Express stock.

Daily chart of American Express stock.

A look at the chart shows just how strong this stock has been. American Express shares hit a low of $114.25 in early December. After Friday’s high, it marked a run of roughly 21% in less than two months.

For investors, it’s hard to be disappointed with that kind of reaction, even though the stock’s post-earnings move is somewhat disheartening. In any regard, where to from here?

With American Express fading on Friday, I want to first see if it will fill its post-earnings gap back down to the $132 area. Ahead of earnings, AXP shares were trading between $132 and $130. If prior resistance at $132 acts as support, it will show that bulls remain in control. However, a move below $132 puts $130 on the table, along with the 20-day moving average.

If that fails as support, look for a drop into the $126 to $128 area, which marked a solid breakout zone for the stock. Below that and the 50-day moving average is in play.

On the upside, bulls need to see American Express take out Friday’s open and eventually reclaim the post-earnings high. Over $138 and $140-plus is on the table.

Here’s the bottom line: Look to see if Amex stock can stabilize above $132. If it can, $138-plus is possible. Below opens up several support layers, the most notable of which comes into play between $126 and $128.