The holiday shopping season officially began on Black Friday, the day after Thanksgiving. FedEx Corp (FDX) - Get Report reports its latest quarterly results Tuesday. More important than the earnings report itself will be the package delivery giant's outlook for the holiday season.
Did consumers open their wallets to shop online or in the mall? Did the Trump rally have an effect, or was this week's Fedrate hike the Grinch that ruined Christmas? FedEx' earnings guidance should answer these questions. Analysts expect $2.91 a share. J.P. Morgan recently initiated coverage of the stock with an overweight rating and a $233 price target.
What do the FedEx charts show?
The daily chart for FedEx shows upside momentum began following a positive reaction to earnings released on March 16. This was followed by a gap open higher on March 17 when the stock popped above its 200-day simple moving average. Then a "golden cross" was confirmed on April 25 when the 50-day simple moving average moved above the 200-day simple moving average indicating that higher prices would follow. This obviously proved to a correct bullish signal.
The weekly chart shows a red line through the price bars, which is the key weekly moving average (a five-week modified moving average). The green line is the 200-week simple moving average considered the "reversion to the mean."
The study in red along the bottom of the charts is weekly momentum (a 12x3x3 weekly slow stochastic), which scales between 00.00 and 100.00, where readings above 80.00 indicates overbought and readings below 20.00 indicates oversold.
A negative weekly chart shows the stock below its key weekly moving average with weekly momentum declining below 80.00 in a trend towards 20.00. A positive weekly chart shows the stock above its key weekly moving average with weekly momentum rising above 20.00 in a trend towards 80.00.
The weekly chart for FedEx is positive but extremely overbought.
Here's the daily chart.
Courtesy of MetaStock Xenith
FedEx closed Thursday at $197.92, up 32.8% year to date and in bull market territory 65.3% above its Jan. 20, low of $119.71. The stock set its all-time intraday high of $201.57 set on Dec. 13.
Note the price gap higher on March 17 above its 200-day simple moving average of $153.46. This followed a positive reaction to earnings reported after the closing bell on March 16. A bullish pattern was confirmed on April 25 with the formation of a "golden cross". This occurred when the 50-day simple moving average rose above the 200-day simple moving average indicating that higher prices lie ahead.
When above a "golden cross" the trading strategy is to buy weakness to the 200-day simple moving average, which was tested at $151.81 om June 24 and at $151.86 on July 7. The bullish "golden cross" remains in play with the close of $197.92 on Thursday.
Here's the weekly chart.
Courtesy of MetaStock Xenith
The weekly chart for FedEx is positive but overbought with the stock above its key weekly moving average of $187.51 and well above its 200-week simple moving average of $148.1, last tested as the "reversion to the mean" during the week of Feb. 26, when the average was $132.12. The weekly momentum is projected to rise to 94.35 this week up from 94.15 on Nov. 9, with both reading well above the overbought threshold of 80.00.
Investors looking to buy FedEx should consider buying weakness to $179.73, which is a key level on technical charts until the end of December. Investors looking to reduce holdings could have done so on strength to $199.63, which was this week's risky level tested on Dec. 13.
This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.