Here is your Bonus Idea with links to the full Top Ten:
American Express (NYSE:AXP), $AXP, rose out of an ascending triangle in October, and after a small hiccup, ran to a high in March. That high turned out to be the tip of a descending triangle, and it broke out of that to the upside in June. The second breakout ran to the current plateau and it has been consolidating there for nearly 2 months. During the consolidation the 50 day SMA has closed the distance to the price and joined the 20 day SMA. Friday saw a push up to resistance and near the all-time high.
The RSI is making a higher high in the bullish zone while the MACD is about to cross up. The latter has been a requirement for the previous 2 break outs. There is no resistance above 87.35 and a Measured Move higher would give a target to 97.50. Support lower may come at 84 and 82.10 followed by 80.30. Short interest is low at 1.9% and the company is expected to report earnings next on October 18th.
The weekly options chain show large open interest this week at the 83.50 Put but also at the 86, 87.5 and 88.5 Call Strikes. Moving out to the October monthly chain, capturing the earnings report, open interest builds on the Put side from 80 to 82.50 and 85, with the strikes in between just opening for business Monday. On the Call side it starts at 82.50 and grows to 85 then falls back at 87.50 with a push higher at 90. Options imply a $3.50 move by October Expiry, 2 days after the report.
American Express, Ticker: $AXP
Trade Idea 1: Buy the stock on a move over 87.35 with a stop at 85.50.
Trade Idea 2: Buy the stock on a move over 87.35 and add an October 87.5/85 Put Spread ($1.12) as protection through earnings. Also sell a January 92.5 Call ($1.38 credit) to fund the protection.
Trade Idea 3: Buy the October 85/87.5 bullish Risk Reversal (42 cents).
Trade Idea 4: Buy the October 13 Expiry 87/89 Call Spread (85 cents) and sell the October 13 Expiry 85 Put (54 cent credit).
Elsewhere looked for Gold to pause in the pullback in its uptrend while Crude Oil continued higher. The US Dollar Index continued to lose ground while US Treasuries paused in their uptrend. The Shanghai Composite and Emerging Markets were marking time short term as they continued to grind through resistance in long term uptrends.
Volatility looked to remain low keeping the bias higher for the equity index ETF’s SPY (NYSE:SPY), iShares Russell 2000 (NYSE:IWM) and PowerShares QQQ Trust Series 1 (NASDAQ:QQQ). Their charts showed strength in the longer time frame for all three. In the short term the IWM was benefiting from some rotation, seemingly at the expense of the QQQ and SPY. Use this information as you prepare for the coming week and trad’em well.
The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.