Long Philip Morris International, Short American Express

We are suggesting going long Philip Morris International (ticker: PM), and short American Express (ticker: AXP). This is yet another longer term, defensive, pairs trade idea that should benefit from overall market action that is either sideways or down. 

The charts for both PM and AXP are classic. PM is consolidating near the high end of a long term range after an uptrend. We feel that enough time has been spent in this range to warrant a decisive breakout, especially when considering that other tobacco stocks such as BTI, RAI, and MO have exhibited powerful relative strength of late. 

PM

The reverse is true for AXP. Instead, it is exhibiting all of the characteristics of a stock ready to break down. Here we see a long term trendline break with action near the bottom of a consolidation range that should finally give way to more downside.

AXP

Disclosure: The author took this pairs trade yesterday.