American Express (AXP) - where to now?
AMER EXPRESS INC (NYSE: AXP)
Sector: Financial Industry: Consumer Financial Services
4/30/2009 $25.22 +0.27 (+1.08%) Vol 38.30 Mil
After Hours: $25.25 +0.03 (+0.12%) Vol. 6,845
Avg. Daily Vol. (13 wk.)29.39 Mil
I completed my Fundamental analysis and I can see why the Bears were shorting AXP. Amazingly, from the data, AXP has actually increased in price during the same time period the short position has also been increasing.
Settlement Date ....Short Interest ...Avg Daily Share Volume ...Days To Cover
4/15/2009 .............. 56,086,729 ............ 30,771,213 ................1.822701
3/31/2009 .............. 53,003,803 ............ 28,805,872 ................1.840035
3/13/2009 .............. 43,788,835 ............ 31,767,049 ................1.378436
compare the short interest to a year ago:
4/30/2008 .............. 22,195,105 ...............9,770,283................ 2.271695
There was a surprise "upside" earnings report .. on 4/23/2009 ... and despite the market actions to the contrary, the fundamentals of AXP calculate to a 1y Target Est: $18.63 +/- 0.25 indicating it's overvalued by $6.32. One unknown, is how much of that $6.32 shortfall, will evaporate under the adjusted Mark to Market Rules which one must expect WILL be applied to assets on the AXP books this next quarter? In the meantime, however, the bulls are clearly winning the battle and driving the sector, the industry, and AXP higher.
Standard & Poor's lowered its credit rating on American Express from A/A-1 to BBB+/A-2, citing liquidity concerns. Standard & Poor's also lowered the credit card company's preferred stock rating to BB from BBB with an outlook of negative. Yet, AXP closed up, though off the intraday high of $26.33, and was up in the after hours market.
Bears, Momentum is clearly against you. Your concerns are quite justified, yet, the RISK now becomes a question of who blinks first and closes their short positions driving the AXP price further up and magnifying losses for those hanging on to their short positions ...
As to the charts ...
(1) AXP intraday - 10 day / 15 minute charts
Moving Average Price Compare
Today, AXP closed below its 13 minute moving average. This is generally considered to be an indication of a bearish trend.
Moving Averages - No current signalsBollinger Bands
AXP is trading near its lower Bollinger Band. This suggests that the stock price is low relative to its recent price action.
The Stochastic Oscillator is registering a bearish signal as the %K line has crossed under the %D and the oscillator recently crossed below the critical value of 80, moving from its overbought condition.
On Balance Volume
The On Balance Volume indicator (OBV) shows that longer term accumulation has given way to near term accumulation selling pressure.
AXP has been relatively stable recently. This is evidenced by the width of its price channel which is tighter than is normal due to the low volatility. Additionally, AXP is trading below its 5 minute price channel. This means that the stock is trading at a new low for the period and the price channel will update to reflect that.
(2) I used 250 trading days from 4/29/2009 and this is what I get:
Overall, the bias in prices is: Upwards. Bullish.
Short term: Prices are moving. Bullish
Intermediate term: Prices are trending. Bullish
Note: this chart shows extraordinary price action to the upside. Bullish
By the way, prices are vulnerable to a correction towards 18.14. - Caution
The projected upper bound is: 28.96.
The projected lower bound is: 21.38.
The projected closing price is: 25.17.
Note: these price projections are for reference only, and can be easily exceeded by the market.
One of the Systems recommended going short on the market close/market open. The foreign market ( Nikkei 8870.01 +41.75 +0.47% ) action negates that signal. The futures market indicates a mildly negative open.
Another System recommended, in confirmation, closing the long position, but did not recommend opening a short position.