Last week’s rousing rebound lifted stocks across the land back to their pre-Brexit levels. And while the lost ground has been reclaimed in most sectors, financials have fallen short.
American Express Company (AXP) in particular looks ripe for another plunge.
At a minimum, the risk-reward is favoring the bears here. And not just that, AXP stock’s technical posture remains on the ropes despite last week’s pop. As the chart below will attest American Express has yet to depart bear country.
American Express Stock Chart
For starters, shares of the multinational financial services corporation still remain below all major moving averages — moving averages which are pointing lower. Which is technician speak for, “the trend on all time frames is down.”
Volume patterns are a bit mixed here. The pair of plunges plaguing the stock in June were accompanied by some pretty heavy distribution days. Unfortunately (for bears anyway), last week’s pop saw a trio of accumulation days showing some notable buying.
And yet, for all its fury, the rebound fell woefully short of recovering all that was lost during the Brexit fallout.
With resistance looming closely overhead and support sitting far below, now is as good a time as any to initiate new bearish plays for spectators looking to get in on the action.
AXP Put Play
If you’re feeling lucky, go for the jugular with a long put play. The Oct $60 put should do the trick. Currently it can be snatched up for around $3. The risk will be limited to the initial debit and forfeited if AXP stock sits above $60 at expiration.
To minimize the loss, you consider bailing if AXP pops above the $63.50 resistance level.
The reward is essentially unlimited, allowing unfettered participation on any downside in American Express over the coming months. Though, if it does return to the $57 support level I suggest harvesting some gains.
At the time of this writing Tyler Craig had no positions in any of the aforementioned securities.
