Charts: Buy AmEx, Be Wary of Citi and BofA
American Express shares looks set to gain nearly $10, but the outlook for Citigroup and Bank of America is negative as shares of the Wall Street banks could be set for sharp declines, Royce Tostrams, technical analyst at Tostrams Groep, told CNBC Thursday.
"American Express is moving in a nice rising uptrend. For the short term there's some support at $42.50, the peak of July," Tostrams said.
Tostrams believes that American Express shares will break higher and continue to rise above $50, from their Wednesday closing price just above $41.
"American Express is one of the few financial stars on Wall Street to buy, so remain on the long side and buy on the dips," he said.
- Watch the full interview with Royce Tostrams above.
Bank of America shares are currently "moving sideways between $14 and $18.25," but the last two months have seen some lower price peaks, he said. The shares closed just above $15 Wednesday.
"These lower price peaks suggest there's selling pressure coming in the market," Tostrams said.
"If the price gives way and falls below $14 then there'll be a next target at about $10. So I believe Bank of America is now neutral, but you don't have to rush into the market so wait for some strong support," he said.
The outlook for Citigroup shares is also negative and the stock price could be set to shave a dollar off its Wednesday closing price of $3.45, according to Tostrams.
"We've fallen below short-term support just above $4. Now the market is moving towards its July lows at $2.55. So I believe as the falling trend remains in tact. You have to be very, very careful with Citigroup," Tostrams said.
"Don't rush into the market, stay on the sidelines and don't enter this stock yet," he added.
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