FedEx Corporation (NYSE:FDX) gapped sharply higher on Monday after the company raised its profit outlook. This stock had been grinding lower along with many of its peers since April, but even before the news, FDX had been starting to stabilize. FDX had been following a channel lower as it corrected the prior rally until it managed to clear the upper bounds in July. While the initial move proved too difficult to hold, the Monday gap could change the entire character of this chart. This gap took FDX back near its 200-day moving average, and more importantly, FDX was able to clear an important high near $79. While FDX will likely come back to fill this gap, it may find buyers at this level who missed the boat on the last move.

Source: StockCharts.com

Of course, one can't mention FDX without immediately thinking of its primary competitor, United Parcel Service (NYSE:UPS). UPS is following a similar pattern to FDX in that it is clearing a downtrend channel and just cleared an important resistance level near $63.50. One big difference however, is that UPS remains above its 200-day moving average. While both UPS and FDX are probably too extended to enter into new positions, the recent gap was very bullish and both could be decent trading candidates after a pullback.

Source: StockCharts.com

One lesser-known transport that is sporting a much nicer looking chart is Atlas Air Worldwide Holdings (Nasdaq:AAWW). This stock had been working on a base while the others in the group were correcting. It cleared the descending trendline that had been marking its recent rally attempts and is in the process of testing its 52-week highs. It is also very near its all-time highs.

Source: StockCharts.com

Pacer International (Nasdaq:PACR) is another smaller and lesser-known transports stock that has an interesting looking chart. While there may be some subjectivity to how you would identify an upper trendline, it is quite clear that PACR has had a difficult time holding above $8 per share. It also has been following a rising trendline below and recently bounced off this level. While this is another stock that is too extended for most traders' taste, it should be watched to see if it can hold above $8 and possibly present a better entry.

Source: StockCharts.com

Bottom Line
While many other groups often take the limelight, the health of the transports is vital to any possible bottoming process in the markets. The transports deliver the goods we consume, and they are often one of the first groups to show signs of a recovery. With the recent focus in the markets centering on the possible deterioration of the consumer economy, watching this group becomes even more important. Overall, the transports are starting to shape up and could be ending the correction that began in late April. If this ends up being the case, it may mean that other sectors will soon follow.

Use the Investopedia Stock Simulator to trade the stocks mentioned in this stock analysis, risk free!

At the time of writing, Joey Fundora did not own shares in any of the companies mentioned in this article.

Related Articles
  1. Trading Strategies

    How To Buy Penny Stocks (While Avoiding Scammers)

    Penny stocks are risky business. If want to trade in them, here's how to preserve your trading capital and even score the occasional winner.
  2. Chart Advisor

    Stocks to Short...When the Dust Settles

    Four short trades to consider, but not quite yet. Let the dust settle and wait for a pullback to resistance for a higher probability trade.
  3. Technical Indicators

    Using Moving Averages To Trade The Volatility Index (VIX)

    VIX moving averages smooth out the natural choppiness of the indicator, letting traders and market timers access reliable sentiment and volatility data.
  4. Chart Advisor

    Strategizing for a Market Fall...or Rally

    The downtrend isn't confirmed yet, so be prepared with trades for whether the stock market rallies or continues to fall. Here's how to do it.
  5. Trading Strategies

    Are You a Trend Trader or a Swing Trader?

    Swing traders and trend traders execute market timing strategies that require different skill sets.
  6. Technical Indicators

    Detrended Price Oscillator Trading Strategies

    The detrended price oscillator (DPO) offers a simple approach to cycle analysis, removing momentum and long-term trends from the equation.
  7. Investing

    Using Fibonacci to Analyze Gold

    Use Fibonacci studies to analyze gold by picking out hidden harmonic levels that can provide major support or resistance.
  8. Investing

    Predictions For The Stock Market

    Learn different choices and strategies that can be used to create a profit regardless of what direction the market is going.
  9. Chart Advisor

    Top ETF Performers YTD - They'll Surprise You

    The top performing ETFs of 2015 may surprise you. Here they are, and the outlook for them going forward.
  10. Chart Advisor

    Four ETFs for Trading Falling Crude Oil

    Commodity traders are turning toward oil because the recent move below a key support level is signaling a move lower. We'll look at four ETFs you can use to gain exposure.
RELATED TERMS
  1. Fintech

    Fintech is a portmanteau of financial technology that describes ...
  2. Indicator

    Indicators are statistics used to measure current conditions ...
  3. Intraday Momentum Index (IMI)

    A technical indicator that combines aspects of candlestick analysis ...
  4. Mass Index

    A form of technical analysis that looks at the range between ...
  5. Money Flow Index - MFI

    A momentum indicator that uses a stock’s price and volume to ...
  6. On-Balance Volume (OBV)

    A momentum indicator that uses volume flow to predict changes ...
RELATED FAQS
  1. What assumptions are made when conducting a t-test?

    The common assumptions made when doing a t-test include those regarding the scale of measurement, random sampling, normality ... Read Full Answer >>
  2. How are double exponential moving averages applied in technical analysis?

    Double exponential moving averages (DEMAS) are commonly used in technical analysis like any other moving average indicator ... Read Full Answer >>
  3. How do you know where on the oscillator you should make a purchase or sale?

    Common oscillator readings to consider making a buy or sale are below 20 or above 80, respectively. More aggressive investors ... Read Full Answer >>
  4. What are the alert zones in a Fibonacci retracement?

    The most commonly used Fibonacci retracement alert levels are at 38.2% and 61.8%. A 50% retracement level is also commonly ... Read Full Answer >>
  5. How was the Fibonacci retracement developed for use in finance?

    The use of Fibonacci retracements in stock trading was popularized by noted technical analysts W.D. Gann and R.N. Elliott. ... Read Full Answer >>
  6. How was the stochastic oscillator developed?

    The history of the stochastic oscillator is filled with its own controversies and inconsistencies. Most financial resources ... Read Full Answer >>

You May Also Like

COMPANIES IN THIS ARTICLE
Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!