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FedEx and UPS Should Hold Their Christmas Lows



Package delivery giants FedEx Corporation (FDX) and United Parcel Service, Inc. (UPS) ended 2018 deep in bear market territory, but both are 8.1% above their Christmas lows of $150.94 and $89.89, respectively. Both set all-time intraday highs in January 2018, and FedEx is 40.6% below its all-time high of $274.66 set on Jan. 18, 2018, while UPS is 28.3% below its all-time high of $135.53 set on Jan. 19, 2018.

Both delivery benchmarks have been hurt by competition from the U.S. Postal Service and by planned air freight service offerings from Amazon.com, Inc.’s (AMZN) Amazon Air. In addition, there are economic challenges from a European slowdown and Brexit.

The daily chart for FedEx

MetaStock Xenith

FedEx has been below a “death cross” since Aug. 7, when its 50-day simple moving average fell below the 200-day simple moving average, indicating that lower prices would follow. Between this bearish warning and Sept. 21, investors had many chances to reduce holdings. The low of $150.94 on Dec. 26 was a “key reversal” day, as the close was above the Dec. 24 high at $157.73. A price gap to the Dec. 17 low of $181.28 is an upside target. This upside potential is below my monthly, semiannual, annual and quarterly risky levels at $192.53, $198.33, $218.11 and $240.07, respectively.

The weekly chart for FedEx

MetaStock Xenith

The weekly chart for FedEx is negative but oversold, with the stock below its five-week modified moving average of $188.07 and below its 200-week simple moving average, or “reversion to the mean,” at $194.04 this week. The 12 x 3 x 3 weekly slow stochastic reading is projected to fall to 11.60 this week, down from 12.80 on Dec. 28 and moving further below the oversold threshold of 20.00. 

The horizontal lines are the Fibonacci retracement levels of the bull market gain of 129% from its low of $119.71 set during the week of Jan. 22, 2016, to the Jan. 18, 2018, high of $274.66. The stock is below its 61.8% retracement of $178.83, which marks the upside potential.  

Given these charts and analysis, investors should buy FedEx shares on weakness to the Dec. 26 low of $150.94 and reduce holdings on strength to my monthly and semiannual risky levels at $192.53 and $198.33, respectively.

MetaStock Xenith

The daily chart for UPS shows the stock below a “death cross” that formed on Nov. 28, when investors could have reduced holdings at the 200-day simple moving average of $113.06. This signal tracked the stock to its 2018 low of $89.89 set on Dec. 24. The stock is below its semiannual pivot at $99.17 and below its quarterly, monthly and annual risky levels of $103.10, $108.45 and $124.81, respectively.

MetaStock Xenith

The weekly chart for UPS is negative but oversold, with the stock below its five-week modified moving average of $102.35. The stock is also below 200-week simple moving average, or “reversion to the mean,” at $108.02. The 12 x 3 x 3 weekly slow stochastic reading is projected to end the week at 16.76, below the oversold threshold of 20.00.

The horizontal lines are the Fibonacci retracement levels of the bull market gain of 129% from its low of $87.30 set during the week of Jan. 22, 2016, to the Jan. 19, 2018, high of $135.53. The stock is below its 61.8% and 50% retracements of $105.78 and $111.47, respectively.  

Given these charts and analysis, investors should buy UPS shares down to its Dec. 24 low of $89.89 and reduce holdings on strength to my quarterly and monthly risky levels of $103.10 and $108.45, respectively.

Disclosure: The author has no positions in any stocks mentioned and no plans to initiate any positions within the next 72 hours.



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