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Asset Watch

Does American Express have further upside?

 

Tuesday, July 26, 2022

Q2 earnings season is in full swing, and market participants continue to separate the haves from the have-nots. With the bulk of S&P 500 companies reporting this week and the Fed widely expected to raise interest rates by 0.75% on Jul. 27, will American Express sidestep the potential volatility?
American Express outperformed analysts’ estimates on both the top and bottom lines on Jul. 22. Noting “continued momentum in spending from our strong customer base,” CFO Jeff Campbell said that several factors “led us to increase our expectations for full-year revenue growth to 23% to 25%, up from our original range of 18% to 20%. For now, though, our EPS guidance remains unchanged, from between $9.25 and $9.65.”

So, while the fundamental outlook remains rosy, the technicals paint a similar portrait. American Express closed above its 100-week moving average on Jul. 22. Moreover, the key level acted as resistance during rally attempts for the weeks ending on Jun. 17, 24 and Jul. 1. Also bullish, after bottoming near its January and February 2020 highs, American Express recouped its rising support line (which was resistance) drawn from the March 2020 lows.

The only caveat is that American Express closed the Jul. 22 session near its November and December 2021 and January and May 2022 lows ($152-$153). Therefore, the battle lines are drawn, and the bulls need to keep the price above $153 to maintain their momentum.

More likely than not?


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