Trade of the Day: American Express (AXP)

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The divergence between the Dow industrials and the transports is the widest it’s been in three years. The Dow has been able to push fresh highs, as the disparity is being partially offset by some of the strength in the blue-chip financial stocks.

Dow component Goldman Sachs (GS) continues making fresh 52-week peaks, while JPMorgan Chase (JPM) set one north of $67 recently. Meanwhile, Visa (V) is at all-time highs following a 4:1 stock split in March.

Although Dow blue-chipper American Express (AXP) is down 14% for 2015, shares have recovered the $80 level and, more importantly, their 50-day moving average. The stock came into the year just above $93 and suddenly looks cheap at current levels. The suits-and-ties might find this an attractive play, as shares will likely challenge $100 this year or next.

Dow

Chart courtesy of Recognia

The AXP July 85 calls (AXP150717C00085000) look tempting at current levels around 35 cents. Longer-term traders can target the AXP October 87.50 calls (AXP151016C00087500) on continued strength.

I’m not quite ready to pull the trigger on AXP just yet, but I do still have the iShares Russell 2000 Index ETF (IWM) trade in play. My trading instructions remain the same, and resistance for IWM is at $125, while short-term support is at $123.

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Article printed from InvestorPlace Media, https://investorplace.com/2015/05/axp-dow/.

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