FedEx, UPS Deliver Stock Gains Ahead of Black Friday

The holiday shopping season officially begins this week on Black Friday, the day after Thanksgiving. That means a lot of goods bought online that will have to be delivered to shoppers. 

The anticipated increase in holiday spending this year has been a major reason why shares of package delivery giants FedEx Corp (FDX) and United Parcel Service (UPS)  surged to all-time intraday highs on Tuesday. Can that trend continue?

FedEx and UPS are the top two components of the iShares Transportation ETF (IYT)  , weighted at 12.59% and 7.61%, respectively. The exchange-traded fund has 22 components, and is the best-performing sector among the 11 S&P 500 sectors so far in 2016, with a gain of 19%. FedEx is beating the ETF with a gain of 26.2% year to date while UPS is matching the ETF.

All three investment choices are above "golden cross" patterns on their daily charts. The transportation ETF confirmed its "golden cross" on July 25. FedEx has been above its bullish technical formation since April 25 and UPS since April 7. A "golden cross" is confirmed when the 50-day simple moving average rose above the 200-day simple moving average and indicates that higher prices lie ahead.

All three have positive weekly charts as shown below with the transportation ETF and FedEx showing overbought momentum. UPS is not yet overbought.

These two stocks and the ETF are great indicators as to whether-or-not the current post-election bull market run-up will extend into a full-fledged Santa Claus Rally.

The weekly chart shows a red line through the price bars, which is the key weekly moving average (a five-week modified moving average). The green line is the 200-week simple moving average considered the "reversion to the mean."

The study in red along the bottom of the charts is weekly momentum (a 12x3x3 weekly slow stochastic), which scales between 00.00 and 100.00, where readings above 80.00 indicates overbought and readings below 20.00 indicates oversold.

A negative weekly chart shows the stock below its key weekly moving average with weekly momentum declining below 80.00 in a trend towards 20.00. A positive weekly chart shows the stock above its key weekly moving average with weekly momentum rising above 20.00 in a trend towards 80.00.

Here's the weekly chart for the transportation sector ETF.

Courtesy of MetaStock Xenith

The Transportation ETF closed Tuesday at $160.36, up 19% year to date and in bull market territory 39.6% above its Jan. 20 low of $114.91. The ETF is still 4.4% below its Nov. 28, 2014 all-time intraday high of $167.80.

The weekly chart shows the Fibonacci retracement levels of the decline from the November 2014 high to the January 2016 low. After setting the low the ETF rebounded above its 23.6% retracement of $127.42 during the week of Feb. 19. The 38.2% retracement of $135.13 and the 50% retracement of $141.36 has been magnets between the week of March 4 and the week of June 25, before the 23.6% retracement was tested again during of July 1 at $127.42.

The year began with the 200-week simple moving average as magnet between the week of Jan. 8 and the week of July 8 as this "reversion to the mean" rose from $127.26 and $132.93.

The ETF has been above its 61.8% retracement of $147.59 since the week of Nov. 11 in reaction to the "Trump Bump." This led to the new multiyear intraday high of $161.11 set on Nov. 22.

The weekly chart for the transportation ETF is positive but overbought with the ETF above its key weekly moving average of $150.98. The weekly momentum reading is projected to rise to 87.10 this week up from 81.87 on Nov. 18, rising further above the overbought threshold of 80.00.

Investors looking to buy the transportation ETF should consider buying weakness to $155.00 and $151.34, which are key levels on technical charts until the end of this week, and until the end of November, respectively. Investors looking to reduce holdings should consider selling strength to $169.99, which is a key level on technical chart until the end of 2016.

Here's the weekly chart for FedEx.

Courtesy of MetaStock Xenith

FedEx closed Tuesday at $188.08, up 26.2% year to date and in bull market territory 57.1% above its Jan. 20, low of $119.71. The stock set its all-time intraday high of $188.50 set on Nov. 22.

The weekly chart for FedEx is positive but overbought with the stock above its key weekly moving average of $178.61 and above its 200-week simple moving average of $146.73, last tested as the "reversion to the mean" during the week of Feb. 26, when the average was $132.12. The weekly momentum is projected to rise to 88.92 this week up from 84.45 on Nov. 18, becoming even more overbought above the threshold of 80.00.

Note the uptrend connecting the highs of $183.51 set during the week of Dec. 12, 2014 through $185.19 set during the week of June 12, 2015. Today this resistance is $189.53. The steep uptrend connects the lows set during the weeks of Jan. 22, Feb. 12, and July 2 and comes into play at $168.44.

Investors looking to buy FedEx should consider buying weakness to $180.32, which is a key level on technical charts until the end of this week. Investors looking to reduce holdings should consider selling strength to $195.28, which is a key level on technical charts until the end of November.

Here's the weekly chart for UPS.

Courtesy of MetaStock Xenith

UPS closed Tuesday at $114.63 up 19.1% year to date and in bull market territory 31.3% above its Jan. 20 low of $87.30. The stock set its all-time intraday high of $115.00 on Nov. 22.

The weekly chart for UPS is positive with the stock above its key weekly moving average of $111.08 and above its 200-week simple moving average of $98.96, last tested as the "reversion to the mean" during the week of Feb. 5, when the average was $92.49. The weekly momentum is projected to rise to 67.22 this week up from 52.89 on Nov. 18.

Investors looking to buy UPS should consider buying weakness to $108.79 and $93.89, which are key levels on technical charts until the end of 2016. Investors looking to reduce holdings should consider selling strength to $117.57 and $126.82, which are key levels on technical charts until the end of November and until the end of 2016, respectively.

This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.

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