Short Trade Idea
Enter your short position between $369.26 (the lower band of its horizontal resistance level) and $387.49 (the upper band of its horizontal resistance level).
Market Index Analysis
- American Express (AXP) is a member of the Dow Jones Industrial Average, the S&P 100, and the S&P 500.
- The S&P 500 broke down below its horizontal resistance zone with rising bearish momentum.
- The Bull Bear Power Indicator of the S&P 500 turned bearish with a descending trendline.
Market Sentiment Analysis
Equity markets extended their sell-off yesterday, led by AI-related tech stocks, after Oracle lost a financial backer for a $10 billion data center project. Equity futures are mixed this morning, after Micron earnings blew past expectations and shares rose over 10% in after-market trading. Markets will also receive October’s CPI report, where analysts expect the core CPI to increase to 3.1% annualized. Expectations for a January interest rate cut are roughly 25%, but the CPI report can inject volatility into today’s session.
American Express Fundamental Analysis
American Express is the world’s fourth-largest card network based on purchase volume. It generally caters to more affluent consumers, and it is well-known for its rewards, exclusive offers, and partnership programs.
So, why am I bearish on AXP after its 25%+ rally?
I remain bearish amid a fragile balance sheet, led by a worsening debt-to-asset ratio, and the push into lower-quality sectors, driven by its BNPL push, which I see as brand-damaging and a move away from its core consumer group that helped it stand out among other credit card issuers. I see no upside catalysts ahead.
American Express Fundamental Analysis Snapshot
The price-to-earnings (P/E) ratio of 25.26 makes AXP an expensive stock relative to its peers. By comparison, the P/E ratio for the S&P 500 is $28.88.
The average analyst price target for AXP is $363.05. It suggests no upside potential with expanding downside risks.
American Express Technical Analysis
Today’s AXP Signal
American Express Price Chart
- The AXP D1 chart shows price action inside a horizontal resistance zone.
- It also shows price action between its ascending 0.0% and 38.2% Fibonacci Retracement Fan levels.
- The Bull Bear Power Indicator is bullish with a descending trendline, approaching a bearish crossover.
- The average bearish trading volumes are higher than the average bullish trading volumes.
- AXP corrected less than the S&P 500, a lone bullish development, but bearish momentum is accelerating.
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My Call on American Express
I am taking a short position in AXP between $369.26 and $387.49. The fragile balance sheet, rising debt, and brand value destruction via the BNPL push fortify my bearish stance.
- AXP Entry Level: Between $369.26 and $387.49
- AXP Take Profit: Between $302.51 and $309.81
- AXP Stop Loss: Between $399.12 and $407.10
- Risk/Reward Ratio: 2.24
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