Trade of the Day: FedEx Corporation Is Poised for a Move

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fdx stock - Trade of the Day: FedEx Corporation Is Poised for a Move

Source: Mike Mozart via Flickr

Shares of FedEx Corporation (NYSE:FDX) have seen a bumpy ride so far year-to-date, much like the broader U.S. stock market. The current juncture for FDX stock, however, sets up a buying opportunity for the active investing and trading crowd.

As the past two months have brought about a notably higher level of volatility to stocks, it has also become abundantly clear to yours truly that many market participants have forgotten how to deal with volatility and therefore how to risk-manage a portfolio through these ups and downs.

To be clear, this is a late-cycle phenomena where after a nine-year bull rally, people have become complacent and conditioned to blindly buy any dips. Once that stops working (and I think we are now nearing this point), much money is lost on part of the bull crowd and frustration levels rise.

As such, I see 2018 as a year for trading and finding good technical levels to trade against … which today is bringing me to shares of FedEx.

FedEx Stock Charts


Click to Enlarge

Moving averages legend: red – 200 week, blue – 100 week, yellow – 50 week

On the multiyear chart, we see that much like the broader stock market, FDX stock went into a classical vertical overshooting mode in December 2017 and this past January as it took the charts parabolic. As a result this stock blew out above its long-term trading range as marked with the black parallels.

Since peaking in January, the stock has flipped into a desperately needed mean-reversion mode that brought it back into the trading range, if only marginally so. In other words, while this is a good start to take some froth out of the stock, in my eye and through the longer term lens, the stock ultimately has plenty further to mean-revert to the downside.


Click to Enlarge

Moving averages legend: red – 200 day, blue – 100 day, yellow – 50 day

On the daily chart, we see that the thus far 16% sell-off from the January highs how has the stock bouncing off its red 200-day simple moving average. At the same time the stock is looking tired from a momentum perspective as the MACD oscillator is making higher lows versus the February lows.

The past couple of days, FDX stock bounced along with the broader stock market and barring any quick bearish reversal, the stock now looks poised for a trip higher back toward $250. Any one-day bearish reversal is a stop loss signal.

Check out Anthony Mirhaydari’s Daily Market Outlook for April 6.

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