Chart of the Day: What's Next as This Holding Glides Down to Test Support?
The stock has retreated from all-time highs.
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It is typical for a stock to pull back from an all-time high as long holders tend to take profits when it is convenient. Remember, building a top is a process but the actual top is a point in time. We have preached that trying to time the market with respect to tops/bottoms is a sucker's game, but finding the best trending stocks or ones that retreat for little reason is right in our wheelhouse.
American Express (AXP) is one of those names that often rises to the occasion when conditions are ripe. On the flip side, it can be a marginal performer if liquidity and seasonal patterns are not bullish.
We see in the chart below the recent pullback from all-time highs continues, and now the stock is in a base-building process. The "check back" to the 200-day moving average was successful, and a small series of higher highs, higher lows is in place.
MACD is on a buy signal as well, stochastics (momentum, in the 4th pane) is bullish, but the ADX is pointing down, which means the chart has a weak trend. Looking at the top pane (price chart) you can see why that is true. Sideways for now.
We like American Express in TheStreet Pro Portfolio and rate it a Two, or "stockpile on pullbacks."
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At the time of publication, TheStreet Pro Portfolio was long AXP.
