Volatility in FedEx shares isn't unprecedented. Shares of FedEx had been tracking their 200-day simple moving average higher since January 2012. After shares set an all-time high on June 11, the company missed earnings estimates on June 17 and by July 1 the stock was below its 200-day simple moving average. The stock is thus set up for another volatile ride in reaction to earnings.
Analysts expect FedEx to earn $2.44 a share when the company reports results before the opening bell on Wednesday. As a global package delivery company, FedEx has currency convergence risk. In the U.S. communities where Amazon(AMZN) - Get Report has fulfillment centers, FedEx has lost market share as local deliveries are done by the U.S. Postal Service even on Sundays and holidays.
Here's the daily chart for FedEx.
Courtesy of MetaStock Xenith
The daily chart shows that FedEx held its 200-day simple moving average on weakness on March 27 and April 1 as this average was rising at $163.44 to $163.94. The company beat earnings estimates on March 18, so weakness to this moving average support provided a buying opportunity.
Going into the company's last earnings report released on June 17, the stock was on an upswing that achieved the all-time intraday high of $185.19 on June 11. The earnings miss released before the opening bell on June 17 caused a price gap lower at the open. From June 29 through July 1, the stock tried to hold its 200-day simple moving average, then at $171.30.
The close below the 200-day that day made the 200-day simple moving average a technical resistance, last tested at $172.88 on Aug. 5.
On Aug. 11 came a dreaded "death cross," where the 50-day simple moving average in blue crossed below the 200-day simple moving average in green, indicating that additional downside was the likely path ahead. This put shares at risk going into the price action that climaxed on "Black Monday," Aug. 24.
Shares of FedEx were already sliding with a close of $156.03 on Aug. 21. The open on Aug. 24 was a downside price gap of 6.1%, with the stock suffering a 10 minute flash crash of 16.7% from the Aug. 21 close to a flash crash low of $130.13. From the all-time high to this low the stock was in bear market territory, down 29.8%.
From Monday's close of $150.23, the stock is down 13.5% year to date and is in correction territory, down 18.9% from the all-time high.
Here's the weekly chart for FedEx.
Courtesy of MetaStock Xenith
The weekly chart for FedEx is neutral, with the stock below its key weekly moving average, shown in red, at $157.08. The reason the weekly chart is neutral is that weekly momentum is projected to rise to 32.20 this week up from 27.36 on Sept. 11.
Momentum scales from 00.00 to 100.00, with a reading below 20.00 oversold and a reading above 80.00 overbought. This study is shown in red along the bottom of the chart.
The 200-week simple moving average in green is at $125.59, representing the longer-term reversion to the mean. FedEx has been above its 200-week since the week of Dec. 9, 2011, when the average was $80.20.
Investors looking to buy FedEx should place a good till canceled limit order to purchase the stock if it drops to $146.80, which remains a key level on technical charts until the end of this week.
Investors looking to reduce holdings should place a good till canceled limit order to sell the stock if it rises to $159.09, which is a key level on technical charts until the end of September.
This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.