FedEx (FDX) - Get FedEx Corporation Report continues to disappoint with its quarterly results and the latest report is no different. Shares are tumbling about 10% in Wednesday’s trading session and the decline is far from an overreaction.
The company missed on earnings and revenue estimates, as sales fell 2.8% year over year and as operating margins declined by more than 50%. For the bearish cherry on top, management cut its full-year earnings outlook.
The move comes just a few days after Amazon (AMZN) - Get Amazon.com Inc. Report created a stir with FedEx, saying some deliveries would not be available due to quality issues. No wonder Real Money made FedEx the Stock of the Day.
Now shares are facing a stark reality, as they flirt with a drop below key support. If that support gives way, it could usher in lower prices. Even if FedEx is able to hold up and rebound, it still faces resistance. Let’s take a look at the charts.
Trading FedEx Stock
A look at the weekly chart above highlights the simple yet destructive pattern playing out in FedEx stock.
Last week, shares broke out over downtrend resistance (blue line) and were flirting with a close over the 50-week moving average for the first time in more than a year. That development is unwinding on Wednesday though, with shares retreating sharply below both measures.
Worse, FedEx stock is breaking below key support near $150. Should it end the week below this mark, it will put the low-$140s on the table, with bears salivating for a retest of the October lows at $137.20. If that fails, there’s no telling when FDX stock may regain its balance.
Even if FedEx is able to avoid falling to its 2019 lows, bulls still have a difficult path from here. On the upside, the first task is to get shares back above $150. If they can, then investors will want to see shares take out downtrend resistance. Staying below this measure doesn’t do buyers any good. In order for FedEx stock just to trade in a sideways range, it will need to break the grips of this downtrend mark.
The bottom line: The charts look grim for FedEx stock. Below $150 and more selling can ensue. Back above it and bulls will eventually need to confront (and beat) downtrend resistance. From a technical perspective, there's little reason to get excited about on FDX stock long side right now.