American Express  (AXP - Get Report) reports earnings on Thursday with the stock trading back and forth around its monthly pivot at $112.00. If the stock is above $112.00 pre-earnings, it will trade to a new all-time intraday high as annual and quarterly risky levels at $117.52 and $117.71, respectively, are my price targets. If earnings disappoint, the downside risk is significant!

Amex is a financial services giant and a component of the Dow Jones Industrial Average. The company offers credit cards, charge cards and travelers' cheques in the USA and around the world. The stock is up 17.4% year to date and in bull market territory 25.6% above its Dec. 26 low of $89.05. Amex set its all-time intraday high of $114.55 on Dec. 3 and plunged 22% to its Dec. 26 low.

The bottom line technically is that Amex will set a new high or confirm a double-top, as the 2019 high of $114.25 was set on March 18. The warning will come from its weekly chart, which will be negative given a close on Friday below its five-week modified moving average at $109.49.

Analysts expect Amex to earn $1.74 when it reports earnings Thursday, April 18. The stock has a market-neutral P/E ratio of 15.10 and a dividend yield of 1.41%, according to Macrotrends. On Jan. 17, investors ignored an earnings-per-share miss that stopped a winning streak of seven consecutive beats. Will earnings benefit from increased spending by consumers, small businesses and corporate card members? On the flip side, the company increased provisions for losses in 2018 as higher write-off rates are needed to offset delinquencies. This should continue in 2019.

The American Express National Bank is monitored by the Federal Deposit Insurance Corporation, who produced a Quarterly Banking Profile for the fourth quarter that shows the bank had $116.7 billion in total assets, about unchanged from the third quarter QBP.

The Daily Chart for American Express

Courtesy of Refinitiv XENITH

The daily chart for Amex shows the 22% decline from its all-time intraday high of $114.55 set on Dec. 3 to the Dec. 26 low of $89.05. Dec. 26 proved to be a "key reversal" as the close that day at $93.84 was above the Dec. 24 high of $91.55. This signal confirmed that 2019 would begin with a tradeable rally. The stock closed Dec. 31 at $95.32, which was an important input to my proprietary analytics. This resulted in a semiannual value level at $74.58 and an annual risky level at $117.52. The close at $109.50 on March 29 was the input to my analytics that resulted in a monthly pivot at $112.00 and quarterly risky level at $117.71.

The Weekly Chart for American Express

Courtesy of Refinitiv XENITH

The weekly chart for American Express will be positive but overbought, given a close on Friday above its five-week modified moving average of $109.49. A close below $109.48 will be negative. The stock is well above its 200-week simple moving average or "reversion to the mean" at $83.85. The 12x3x3 weekly slow stochastic reading is projected to end this week at 80.07 just above the overbought threshold of 80.00. A close below $109.49 on Friday will push this reading below 80.00.

Trading Strategy: Buy weakness to the 200-day simple moving average at $104.97 and reduce holdings on strength to annual and quarter risky levels at $117.52 and $117.71, respectively.

How to use my value levels and risky levels:

Value levels and risky levels are based on the last nine weekly, monthly, quarterly, semiannual and annual closes. The first set of levels were based on the closes on Dec. 31. The original semiannual and annual levels remain in play. The weekly level changes each week; the monthly level was changed at the end of January, February and March. The quarterly level was changed at the end of March. My theory is that nine years of volatility between closes are enough to assume that all possible bullish or bearish events for the stock are factored in already. To capture share price volatility, investors should buy on weakness to a value level and reduce holdings on strength to a risky level. A pivot is a value level or risky level that was violated within its time horizon. Pivots act as magnets that have a high probability of being tested again before its time horizon expires.

Disclosure: The author has no positions in any stocks mentioned and no plans to initiate any positions within the next 72 hours.