FedEx Chart Faces Two Key Levels With Earnings on Deck

FedEx will report earnings after the close of trading Tuesday. The company has been struggling and the charts reflect it.
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FedEx  (FDX) - Get Report shares have not had an easy run. Unfortunately, that doesn’t just include 2020 - the struggle for this stock has now stretched into years.

Shares peaked at more than $260 in January 2018. More than two years later, FedEx stock is almost 50% below that mark, closing Monday’s session near $135.

With the spike in e-commerce is quite evident — based on comments and results from Amazon  (AMZN) - Get Report, Shopify  (SHOP) - Get Report and others - one would think that FedEx was doing quite well.

Perhaps the company is and we will get one heck of a surprise when the company reports its quarterly results after the close of trading on Tuesday.

However, a picture is worth a thousand words, and in much fewer words the charts don't paint a pretty picture.

Shares have continued to make a series of lower highs, and are setting up in a tightening pattern that will either need to resolve higher and break this long-term downtrend or resolve lower and send FedEx into a possible tailspin.

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Trading FedEx Stock

Daily chart of FedEx stock.

Daily chart of FedEx stock.

Using the weekly chart really highlights the underperformance investors have seen in FedEx stock. Shares have been under constant pressure, with the 50-week moving average continually acting as resistance for more than a year now.

However, investors also see how shares are coiling into a tighter and tighter range over the weeks. That leaves the potential for something notable to happen — at least, technically speaking.

On a bullish earnings reaction, investors will want to see the stock clear the 200-day moving average at $139.62 and the 50-week moving average at $142.81. To clear the latter, FedEx will need see a roughly 6% gain from Monday’s close. Up over 2% so far on Tuesday and shares are off to a good start.

Above the 50-week moving average and the June highs near $150 are the next upside target, followed by resistance between $165 and $170.

If the reaction is bearish, investors will want to see FedEx stock hold the $125 level. This mark was resistance in March and April, before becoming support in late-May and June. The 50-day and 10-week moving averages also come into play near $125. 

Below $125 puts uptrend support in play (blue line), but if there’s a true shake-out in FedEx stock, I would be hesitant to put money to work on the thesis of this mark holding as support.

For now, let’s watch $143 on the upside and $125 on the downside.