Bloomberg

Package delivery giants FedEx Corp. (FDX) and United Parcel Service Inc. (UPS) have had similar volatile rides lower so far in 2018. Both set all-time intraday highs in January and set their 2018 lows this week. If you believe stocks are going to have a Santa Claus Rally, these stocks should rebound. Without renewed strength in package deliveries holiday spending could be challenged.

FedEx is down 24% year to date and in bear market territory 31% below its Jan. 18 high of $274.66. Its 2018 low is $187.03 set this week on Dec. 11.

FedEx is expected to report earnings on Dec. 18 and analysts expect the company to earn $4.00 per share. Even though revenue revisions are steadily rising, warnings come from Europe, Brexit and a potential slowing of the U.S. economy.

An analyst from Morgan Stanley (MS) opines that as Amazon (AMZN) Air will take share from both FedEx and UPS.

UPS is down 13.2% year to date and in bear market territory 23.7% below its Jan. 19 high of $135.54. Its 2018 low is $100.89 set on Dec. 10.

UPS is more likely to be owned by equity money manages as the stock has a favorable dividend yield of 3.49%.

The Daily Chart for FedEx

Courtesy of MetaStock Xenith

FedEx has been below a "death cross" since Aug. 7 when the 50-day simple moving average fell below its 200-day simple moving average, indicating that lower prices lie ahead. The stock closed at $247.85 that day then traded around three horizontal lines which are my annual, monthly and semiannual pivots, now risky levels at $232.09, $233.74 and $237.96, respectively. On Dec. 3, the stock failed at the lower two of these lines as an opportunity to reduce holdings.

The Weekly Chart for FedEx

Courtesy of MetaStock Xenith

The weekly chart for FedEx is negative with the stock below its five-week modified moving average of $215.54 and has fallen below its 200-week simple moving average or "reversion to the mean" $194.31 this week. The 12x3x3 weekly slow stochastic reading is projected to fall to 24.22 this week down from 28.42 on Dec. 7.

The horizontal lines are the Fibonacci Retracement levels of the bull market gain of 129% from its low of $119.71 set during the week of Jan. 22, 2016, to the Jan. 18, 2018 high of $274.66. The stock is between its 61.8% retracement of $178.77 and its 50% retracement at $197.04.

Given these charts and analysis, investors should buy FedEx at the market for an initial position then add to this position on weakness to the 61.6% retracement level at $178.77. Reduce holdings on strength to my annual and semiannual risky levels at $232.09 and $233.74, respectively.

The Daily Chart for UPS

Courtesy of MetaStock Xenith

The daily chart for UPS shows three horizontal lines that are my semiannual pivot at $112.64, my quarterly pivot at $116.45 and my monthly risky level at $124.78. The stock is below its 50-day and 200-day simple moving averages of $111.20 and $113.16, as a "death cross" formed on Nov. 28.

The Weekly Chart for UPS

Courtesy of MetaStock Xenith

The weekly chart for UPS is negative, with the stock below its five-week modified moving average of $109.17. It is also below its 200-week simple moving average or "reversion to the mean" at $108.13. The 12x3x3 weekly slow stochastic reading is projected to end the week at 27.16 down from 28.68 on Dec. 7.

The horizontal lines are the Fibonacci Retracement levels of the bull market gain of 55% from its low of $87.30 set during the week of Jan. 22, 2016 to the Jan. 19, 2018 high of $135.53. The stock is below its 61.8% and 50% retracements of $105.78 and $111.47, respectively.

Given these charts and analysis, investors should buy UPS at the market for an initial position. Add to the position on a weekly close above the 61.6% retracement level at $105.79. Reduce holdings on strength to my semiannual and quarterly risky levels at $112.64 and $116.45, respectively.

Disclosure: The author has no positions in any stocks mentioned and no plans to initiate any positions within the next 72 hours.

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