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UPS Delivers and Stock Sent Higher - What the Charts Say

United Parcel Service didn't just beat earnings expectations, it crushed them both on the top- and bottom-lines. Here's how to trade the stock now.

Shares of United Parcel Service  (UPS) - Get United Parcel Service, Inc. Class B Report were flying on Thursday, up more than 15% after better-than-expected earnings.

The move was vaulting shares to new all-time highs, as high demand from healthcare and residential shipments drives steady demand. With  (AMZN) - Get, Inc. Report earnings on deck for Thursday after the close, investors will likely hear about strong e-commerce demand that helped to drive UPS’s strong results.

Non-GAAP earnings of $2.13 a share beat expectations by $1.05 a share, while revenue $20.46 billion grew 13.4% year over year and obliterated estimates by more than $3 billion.

The results follow the better-than-expected report from FedEx  (FDX) - Get FedEx Corporation Report earlier in the month, as shipping demand remains elevated.

Based on the price action from Thursday - with UPS already having its highest volume trading day since September 2012 - the bulls are quite enthusiastic over the report.

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Trading UPS Stock

Daily chart of UPS stock.

Daily chart of UPS stock.

With the strong open, shares gapped higher by more than 11% and have gained momentum since. Also paying attention to the open, UPS stock began Thursday’s trading session right at the 138.2% extension.

Keep in mind, this extension comes from the March low to the November 2019 high, which is the 52-week high for UPS.

After a brief rally above $145, shares are recoiling a bit, which has given us an excellent trading range. On the upside, I want to see if UPS stock can take out its post-earnings high at $145.50 and trade up to the 161.8% extension near $147.

A close above the latter puts the two-times range extension on the table at $162.54. While it may take a little while to reach this target — if UPS can reach it at all — it’s a reasonable trim spot should it get there.

On the downside, I am watching the $138.2% extension and the session low at $135.15. Below that mark could accelerate some of the selling pressure, putting the potential for a gap-fill down toward $125 in play.

After such a strong earnings report, I wouldn’t expect robust selling pressure. It would have to coincide with a new company-specific development or a market-wide selloff.