Trade Carefully Today. A Dip Is On The Horizon.

Yesterday’s trade idea, WDAY, exploded higher as one might expect given the strong market and its setup.

However, there is still a chance that it will correct for a second opportunity to enter in the trade’s buy zone.

Today’s trade idea is the same tactic but in a completely different sector.

American Express (AXP) has a very good-looking breakout pattern beginning with its gap above $115 on 4/25.

The breakout followed through, and in the recent market pull back it held up much better than the market.

Additionally, it’s low of the recent pull back is just above the breakout level, which is typical of strong breakouts.

This big picture is poised for further gains, and with the breakout being new; the gains could be substantial over the coming months.

However, in the interest of having a stop, which is under the breakout level, this trade requires a “buy on the dip” approach.

The stop should be under $114.

The entry zone is in the area where there should be good support, $115 to $118.

Finally, the current condition of the general market should be considered when entering this trade. The market has bounced nicely from its breakdown below the 50-day moving average, but it is still in a precarious position.

If the market is trading under a prior day low, and under its 50-day average, it is not a good idea to enter any long trades. This not a general rule for any time, but currently that condition could indicate a resumption of breakdown from earlier this week.

It’s Friday. If the market moves lower, it’s not a good time to buy the dip.   

Trade smart,

Rick Nartarian, Chief Investment Officer
The American Investor Daily