This article originally appeared on RealMoney.com on Sept. 4, 2014 at 2:04 p.m. To read more content like this AND see inside Jim Cramer's multi-million dollar portfolio for FREE... Click Here NOW.
FedEx (FDX) shares are up more than 4% this week and currently testing their July all-time highs. The move is supported by volume that is greater than the 50-day moving average of volume and by improvement in Chaikin money flow. Moving average convergence/divergence (MACD) is making a bullish crossover on its centerline, and the Relative Strength Index (RSI) has jumped higher. The recent move in price came after a retest of the intermediate-term uptrend drawn off the lows since April, and accelerated when it broke above the 50-day moving average and the $151 level, the rim line of a rudimentary cup-and-handle formation. The July highs should offer some temporary resistance, but there is a safe zone of support between $151 and the uptrend line, which would help to support any pullback. FedEx would offer a better risk/reward ratio if it moves back to that zone, but another stock in the sector that has yet to break out of a cup-and-handle pattern of its own may be positioned to play catch-up.
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United Parcel Service (UPS) has lagged FedEx by about 11% this year, and a disappointing earnings report in July saw shares gap lower. The stock price continued to decline, back to their April low, before they bounced and began forming the cup portion of the pattern. Today the rim line in the $99.15 area is being tested, and the 50-day moving average is providing additional resistance. MACD and RSI are both tracking higher, and money flow is turning positive. UPS is a long candidate after a close in upper candle range above the rim line, with an initial stop under the handle of the formation, and a pattern price target that fills the gap and projects back up to the July high.