NEW YORK (TheStreet) -- Good day traders!
1. First, let's look at FedEx, the worldwide mega shipping company.
FedEx traded up 1.63% on Wednesday, and closed at $154.38 per share.
- Wednesday's range: $152.25 - $154.47
- 52-week range: $101.95 - $154.50
- Wednesday's volume: 1,334,052
- 3-month average volume: 1,708,050
FedEx looks good from a technical standpoint, as it has been in a strong uptrend since the beginning of February -- up over 15% year-to date. Plus, the chart is a j-hook pattern that is already in progress. Yesterday's price action confirmed the j-hook, so look for continued bullish trading today. J-hooks are very common and can offer great earning potential.
FedEx's j-hook started on July 3, when it created a top. Then it pulled back and consolidated for a few days, and closed below the t-line. On Monday price action gapped up over the t-line, and closed over the t-line, testing it. Then on Wednesday, the chart formed a bullish engulfing signal, piquing my bullish interest. Then, true to form, yesterday the stock gapped up and traded strongly to new highs. Yesterday's candle cleared the recent highs of July 3, which is the confirmation of the j-hook.
Today, look for an entry as cheap as the price action will allow. I'd like to have an entry within yesterday's trading range, as low as the t-line, which is at $151.92. As a short-term trader, I'd like to see a bit of a pullback to get a better entry.
I'd set my stop as low as the 34-day exponential moving average, at $147.89. I'd set my first target at the top of the current trading channel, then add to the position on pullbacks. Stay long until you see a confirmed sell signal, or a close below the t-line.
2. Now let's look at the energy company Marathon Oil. The company's North America exploration and production segment explores for, produces and markets liquid hydrocarbons and natural gas in North America.
Marathon traded up 2.44% yesterday, and closed at $40.27 per share.
- Wednesday's range: $39.64 - $40.27
- 52-week range: $31.57 - $40.33
- Wednesday's volume: 5,966,938
- 3-month average volume: 6,284,200
Marathon looks good technically, as it is up 27% since February, and much of that percentage was achieved since May. Yesterday the chart formed a bullish "marubozu" candlestick. A morubozu candle is a candle with no top or bottom wicks -- and this is a textbook marubozu.
Think of the sentiment that this candle shape represents. The stock opens and trades up all day without pulling back all the way into the close.
Volume has been increasing for the last four trading days on the bullish move and doesn't have much strength or volume on bearish moves. Look for this chart to break above the recent high of $40.33, which would confirm a j-hook pattern.
I'd like to see a pullback today for a better entry, say above $39.65. I'd set a stop at $39.05, and move it up as the price action moves up. I would target the top of the current trend channel, and add to this position as it closes above the $40.33 level, then continue to add to the position on pullbacks. Stay long until you see a confirmed sell signal, or a close below the t-line. Let the trade work, and remember that the uptrend is still in effect until it is a confirmed downtrend.
3. Lastly, let's look at Southwest Energy, an independent energy company engaged in the exploration, development and production of natural gas and oil in the U.S.
Southwest trade up 2.33% yesterday, and closed at $43.39 per share.
- Wednesday's range: $42.38 - $43.46
- 52-week range: $34.88 - $49.16
- Wednesday's volume: 5,955,033
- 3-month average volume: 3,844,860
Southwest is working nicely, as are a lot of the energy charts. The Energy Select Sector Index (XLE) broke a bullish flag signal yesterday, and the stocks within that sector will likely follow suit.
This is a chart that is in a downtrend, down almost 12% since reaching its 52-week high of $49.16 on April 23. On Tuesday, the chart formed a "morning star" candlestick signal, which is a reversal signal. Morning stars are most compelling when they appear at a support level, as this chart has done. There is support at the 200-day simple moving average, which is at $42. Yesterday confirmed that sentiment by slightly gapping up and trading up nicely throughout the day.
This is an attempt at catching a falling knife, and trying to catch the bottom for maximum profit potential.
I'd like to have an entry at about the t-line on positive trading, which is at $43.44. I would set a stop at just below yesterday's trading level, say at about $42.30, as I wouldn't want to see it trade below this level. That level would confirm the bearish trend. I would target just below the recent highs to secure my profits.
My first target would be $47.55, which is roughly 8%. Take some profits at this level, then add to the position on a breakout above those levels. A break above $47.55 will confirm a trend reversal. The next target is the 52-week high of $49.16, which is 11% from yesterday's close. Stay long until you see a confirmed sell signal or a close below the t-line.
Good luck traders!
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At the time of publication, the author held no positions in any of the stocks mentioned.
This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.
TheStreet Ratings team rates FEDEX CORP as a Buy with a ratings score of A+. TheStreet Ratings Team has this to say about their recommendation:
"We rate FEDEX CORP (FDX) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its solid stock price performance, impressive record of earnings per share growth, compelling growth in net income, revenue growth and largely solid financial position with reasonable debt levels by most measures. We feel these strengths outweigh the fact that the company shows weak operating cash flow."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Powered by its strong earnings growth of 158.94% and other important driving factors, this stock has surged by 45.88% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, although almost any stock can fall in a broad market decline, FDX should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
- FEDEX CORP reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, FEDEX CORP increased its bottom line by earning $6.79 versus $4.92 in the prior year. This year, the market expects an improvement in earnings ($8.80 versus $6.79).
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Air Freight & Logistics industry. The net income increased by 140.9% when compared to the same quarter one year prior, rising from $303.00 million to $730.00 million.
- Despite its growing revenue, the company underperformed as compared with the industry average of 3.6%. Since the same quarter one year prior, revenues slightly increased by 3.5%. Growth in the company's revenue appears to have helped boost the earnings per share.
- The current debt-to-equity ratio, 0.31, is low and is below the industry average, implying that there has been successful management of debt levels. To add to this, FDX has a quick ratio of 1.58, which demonstrates the ability of the company to cover short-term liquidity needs.
- You can view the full analysis from the report here: FDX Ratings Report
TheStreet Ratings team rates MARATHON OIL CORP as a Buy with a ratings score of B+. TheStreet Ratings Team has this to say about their recommendation:
"We rate MARATHON OIL CORP (MRO) a BUY. This is driven by multiple strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its compelling growth in net income, attractive valuation levels, expanding profit margins, largely solid financial position with reasonable debt levels by most measures and increase in stock price during the past year. We feel these strengths outweigh the fact that the company shows weak operating cash flow."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Oil, Gas & Consumable Fuels industry. The net income increased by 200.0% when compared to the same quarter one year prior, rising from $383.00 million to $1,149.00 million.
- The gross profit margin for MARATHON OIL CORP is rather high; currently it is at 61.01%. Regardless of MRO's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, MRO's net profit margin of 34.09% significantly outperformed against the industry.
- The current debt-to-equity ratio, 0.33, is low and is below the industry average, implying that there has been successful management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.97 is somewhat weak and could be cause for future problems.
- Compared to where it was 12 months ago, the stock is up, but it has so far lagged the appreciation in the S&P 500. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
- You can view the full analysis from the report here: MRO Ratings Report