Razvan
Short

American Express - Bearish Signal

BATS:AXP   AMERICAN EXPRESS CO
210 5 3
Wohoo! Nice Shooting Star there. Created on high volume , in a new price high. Divergence on the 24 RSI ...a lot of good signals to short. I am aiming for 86.70 at least.
The shooting star formed after the earnings report which came only a bit below expectations, but I guess investors expected worse, hence the stronger correction prior to the report. This shooting star might be only profit covering after the big gap up. I wouldn't short now, I would wait a bit more for the dust to settle, of course if we do see another big gap down I would. I am actually long AXP since two weeks.
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Razvan vlad.adrian
2 years ago
Shooting Star on high volume after a positive gap...seems like a good signal to me :). And it hit my target expectations
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vlad.adrian PRO Razvan
2 years ago
I hope it won't seem that I'm arguing, cause many things that I learned, I learned from you and from the books you recommended. But there is a but, and please tell me what you think. I would put this decline in AXP on the shoulders of the weak market, and here is why. Take a look at other Dow Companies, including the Dow itself. Lets use 9th of October as our starting point. After the big gain starting then, last weeks Dow corrected 50%. I consider Nike, 3M, Visa and Boeing the strongest companies in the Dow, because they hold up best during corrections and had the biggest gains out of all the other 30 companies.
MMM - 61.8 correction
BA - more than 70 % correction
NIKE - 80% correction
GS - 61.8% correction
JPM - 50%
XOM - almost 61.8%
Visa - 38.2% (after a veryyyy good earnings report and almost a marubozu that day)
These are all well correlated stocks with the Dow (except XOM, which has been only for the last months, and Visa, who just has huge gains, without major corrections) . The only Companies that have a high correlation and declined less than the Dow are AXP and DIS. This is why I consider this fall due to the market. I didn't understand the first reaction anyway in AXP, when we had lower than estimated earnings and a gap up.
My point is, going short after the earnings report and the shooting star just wouldn't make it for me. Going short because of the overheated american market is something else. Comparing the corrections in the companies I listed I believe the shooting star was just a coincidence. Compare it with Visa, which had incredible gains in 2013. Visa posted better than expected earnings, had a very long up candle (signal of strength) and declined as much as AXP. Once again, please don't take this comment as an argument, it is just an opinion and I look forward to your answer, even though it might contradict my opinion :))
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vlad.adrian PRO Razvan
2 years ago
OHH, I just heard the message you sent through our common 'acquaintance' :))). I didn't contradict your chart, I said "I would wait a bit more for the dust to settle". The reason I said this (and probably I didn't explain my reasons enough) was because there were some important (to me) hills up ahead and an earnings report day is just too volatile and to me it doesn't provide a good signal of what's comming. So, the reasons:
1 - strong support at 91
2 - strong pshychological support at 90
3 - RSI still rising (I don't know RSI that well, I use the MACD). On the MACD the histogram was rising, so no bearish divergence yet. The divergence was solid on the 23rd, according to the histogram.
4 - I always, always wait for confirmation after a candle such as shooting star, doji, spinning top etc.
5 - I always wait after an earnings report, I don't jump in. I jumped in before, and got burned, so I learned to wait.
6 - the market was rising, and AXP is well correlated as I said in my previous comment.
If (and I admit I didn't) I would go short, I would go on the 24th. Only then, I had my short signal, according to the way I look at stocks ( I never shorted a stock until now, I have to learn more about it).
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Divergence is in play.. Should push lower, especially after this recent new high while making a new low on RSI. 83.74 looks like an ideal target.
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