Shares of logistics giant FedEx (NYSE:FDX) have seen wild swings all of 2019, and these swings are continuing after the company’s latest earnings report on Sept. 17. FDX stock dropped sharply in after-hours trading on Tuesday and could slide further in the coming weeks.
Many market participants consider FedEx to be a good read on the global economy, given the company’s global logistics business. The company has been issuing cautious guidance at best for the past 12 months, and this cautious tone was reiterated in the company’s earnings call on Tuesday. Specifically, the CEO Frederick W. Smith cited global trade tensions as a concern over global growth.
From this perspective, new potential headlines around the U.S.-China trade war in August could either be bullish (if an agreement is found) or bearish (no agreement) for FDX stock.
One way to get around this headline-driven, sensitive market is by gaining perspective on the charts.
FDX Stock Charts
On the multi-year weekly logarithmic chart we note that after FDX stock peaked in early 2018 (along with many global stock markets, including the New York Stock Exchange Composite), it began to trade out a series of well-defined lower lows. As the stock sliced through its moving averages in 2018 it also saw those moving averages turn from up-ward sloping to downward sloping. Technical analysis 101 teaches us that if a succession of moving averages are broken, then they stand a good chance of becoming resistance upon the next bounce.
Also note that in 2018, FedEx stock fell out and below its trading range as marked by the two purple parallels. All of this to me points the stock lower and potentially down toward the black longer-term support trend line.
On the daily chart we see that the stock’s red 200-day simple moving average, after holding as support through the first half of 2018, then began acting as resistance, particularly so far in 2019. The latest sharp rally in FDX over the past few weeks once again pushed the stock up to this moving average, where it promptly and sharply is now getting rejected following the latest earnings report.
As of this writing, FedEx stock looks to open for trading around the mid-to-low $150’s on Sept. 18. Given these chart patterns. I would expect that FedEx stock ultimately breaks below the 2019 lows around $150 with room toward $140 as a next downside target. Any sharp bullish reversal, particularly upon any potentially bullish headlines surrounding the U.S.-China trade war would be a stop loss signal.
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