United Parcel Service, Inc. (UPS) Stock Is a Top Breakout Candidate

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Transportation stocks — as represented by the iShares Dow Jones Transport. Avg. (ETF) (NYSEARCA:IYT) — gained about 3% on Monday in the broad-market relief rally.

Beat the Bell: United Parcel Service, Inc. (UPS) StockWe should respect and be cautious of any post-election volatility, but the transports continue to act well in an otherwise lackluster stock market. On top of my list of breakout candidates sits United Parcel Service, Inc. (NYSE:UPS). UPS stock could see a pop into year-end, barring any broader market malaise.

Before looking at the charts of UPS stock, let’s get something clear. High-probability trades are not setting up in either direction near-term based off Monday’s pre-election rally.

Yes, stocks and indices alike acted great. Through a pure price action lens, they look promising.

However, any post-election volatility could quickly erase Monday’s enthusiasm for stocks. In my mind, higher-probability trades will set up once the initial reaction to the U.S. election outcome has passed.

UPS Stock Charts

Looking at the longer-term chart of UPS stock, we see that for the most part, the uptrend off the 2009 lows has taken place in a well-defined channel. Breakout attempts in 2013 and 2014 were faded, as was a breakdown attempt in January of this year.

Through this multiyear lens, this now leaves UPS stock smack-dab in the middle of the longer-term range.

UPS stock chart weekly view
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UPS stock as of Monday’s close is higher by 14% year-to-date and thus one of the better-performing stocks.

Note that Monday’s rally marginally pushed the stock out of a multi-month consolidation phase as the stock gapped higher Monday morning and never looked back.

At the bottom of the chart, I added a ratio chart of the IYT ETF versus the S&P 500. This shows us the relative strength of transportation stocks versus the broader U.S. stock market. The relative picture of the transportation sector is still looking promising, and UPS stock on the daily chart is increasingly flirting with a more meaningful breakout.

upsdaily
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As such, I must respect what I see from a price-action perspective, regardless of the weak broader market structure and the uncertainty around the near-term reaction of risk assets to the U.S. election outcome.

My plan is simple. Once the initial reaction to the election has run it course, I want to buy UPS stock around $110 or higher, if and when the market gives me the chance to do so.

Once the dust has settled somewhat following the election results, a year-end rally in stocks still looks to be in the cards. UPS stock’s absolute and relative performance looks promising for a move toward $115-$116.

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Article printed from InvestorPlace Media, https://investorplace.com/2016/11/united-parcel-service-inc-ups-stock-breakout-iplace/.

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