Shares of transport giant FedEx (FDX) are in full breakout mode on Monday. The stock is up over 3% as it extends the rally off last week's low. FedEx is working on a four-day winning streak and is breaking above a significant overhead trendline.
FedEx bulls should be very encouraged by this powerful breakout move.
Back on Sept. 21, FedEx exploded to the upside following its first-quarter earnings report. The stock opened that session with a huge breakout gap as volume surged. FedEx finished with a 6.9% gain, taking out heavy resistance near the early 2016 highs. The stock drifted higher over the next week before running out of momentum just above $177. By the end of the month, it was clear FedEx would need a healthy consolidation before the rally could resume. During his seven-week process, the stock held key support near the old highs.
As Monday's breakout move gains steam, the $169 area could prove to be a major support zone.
In the near term, FedEx investors should consider the stock a buy on weakness. The stock has left behind a fresh support zone between the September and October highs. This important zone runs between $177.50 and $176.35. A drift back down to this area would offer a very low risk entry for patient bulls.
On the upside, FedEx is headed for a retest of its all-time high of $185.20 set back in June of last year. A pullback from the this heavy supply zone is very likely.