Conclusion, Investment Implications, Strategy
American Express Company (AXP) appears to be resuming its October 2020 major uptrend amid quarterly relative performance versus the benchmark S&P 500 (SPX). A sustained rise above the $135.23 area would help confirm to this and target an additional 15% rise to $142.00 per share. This is an Asbury Momentum trade idea.
Analysis and Rationale
American Express Company (AXP), together with its subsidiaries, provides charge and credit payment card products, and travel-related services worldwide. The company operates through three segments: Global Consumer Services Group, Global Commercial Services, and Global Merchant and Network Services. Its products and services include payment and financing products; network services; expense management products and services; and lifestyle services. The company’s products and services also comprise merchant acquisition and processing, servicing and settlement, point-of-sale marketing, and information products and services for merchants; and fraud prevention services, as well as the design and operation of customer loyalty programs. It sells its products and services to consumers, small businesses, mid-sized companies, and large corporations through mobile and online applications, third-party vendors and business partners, direct mail, telephone, in-house sales teams, and direct response advertising. American Express Company was founded in 1850 and is headquartered in New York, New York.
The upper panel of Chart 1 below plots AXP daily since August 2020 along with its 200- and 50-day moving averages, widely-watched major and minor trend proxies. The lower panel displays a corresponding daily relative performance chart of AXP versus the benchmark S&P 500 (SPX, blue) along with its 63-day moving average (green, quarterly, our Strategic time period).
The colored highlights in the upper panel show that AXP resumed its minor uptrend, as defined by its 50-day MA, on Dec 22nd, while the lower panel shows AXP simultaneously resumed its quarterly relative outperformance trend versus SPX. A sustained rise above the 50-day MA, currently at $135.23, would help to confirm this and target an additional 15% rise to $142.00 per share.
Table 1 below shows that considering the aforementioned upside target and a protective stop placed below the $116.85 area, a long entry price of $123.00 would provide a 1:3.1 risk/reward ratio (risking $1.00 to make $3.10) with an initial risk of 5.0%.
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