Check out these charts of American Express (AXP), MasterCard (MA), and Visa (V). Here’s the short story. (February 02, 2018)AXP SP-500 AXP MA V AXP MA
A really, really tough day in the market, that is if you were trading hope. If you were trading prudence you probably didn’t have a lot anyway. So you are on the sidelines waiting for a buying opportunity, I go into detail on this in our Weekend Update for members. Just essentially saying, on a very short-term basis we are probably going to see a snapback on Monday. But nobody really knows for sure.
I will just tell you this: When you see this type of thing if you were kind of experiencing this. In other words, if you were watching the market fall, maybe you were hanging onto your stocks and they were going against you, and you were just really not taking action because you were frozen; the S&P ( INDEXCBOE: .INX ) doesn’t really fall 2 percent too often, not in a day. So if that describes you then you probably feel like this is going to go straight to zero, and it is really not. This will just be kind of a zigzag here like we always see but there is definitely pressure to the downside.
So I wouldn’t be looking at Monday as a buying opportunity unless you are a super short-term trader and you better know what you are doing. If that is not your skill don’t just decide over the weekend that you are going to become a short-term trader. If you are kind of scratching your head wondering what to do, then you are the rookie jumping onto the poker table with all these pros trying to see if you can win a hand. Don’t be doing that.
I want to just look at the credit card companies. If you are the type of trader that is looking for shorts this probably wouldn’t be the best short here, American Express ( NYSE: AXP ). Even though I do believe it is going lower with the kind of move it had, you would kind of rather see it up around 98.00-98.50. Basically, come up to the 50-day moving average and then fail to get above this last high. You want to see the stock coming up back here somewhere around 99.00 but NOT making a new high here. So you are shorting the stock right around 99.00, maybe close to the 50-day moving average if it looks like it is starting to weaken. And then you put your buy stop right up here. So if the stock does start to move to a new high you are out of there.
Here is kind of a better possibility here, Mastercard ( NYSE: MA ). They already reported, right? This looks kind of like what is called a Tweezer Top. Where you get this big spike up one day and then close lower. And then another big spike up the other day and it closed lower. So it is like two days in a row the stock has tried to rally on big buying, look at the volume. But then selling pressures come in and just knocked the stock down. It rallied up above the upper Bollinger Band, which tends to not hold unless it is a breakout and this is not a breakout, the stock had already been moving higher. So this is a stock that just kind of looks like it needs more air let out of the tires. I think this stock should move lower here.
Then the last one, Visa ( NYSE: V ). You don’t want to short this because frankly it just looks like it is reverting back to the mean. So this would one that I wouldn’t want to be long. But if you are kind of looking for something sporty to do on the downside consider American Express ( NYSE: AXP ), consider Mastercard ( NYSE: MA ) They are totally different configurations but both of them, I think, give you good short entries.