FedEx Corporation (FDX), the worldwide package delivery giant, is benefiting from higher shipping rates and from lower corporate taxes. The stock is consolidating a steep correction of 17.6% from its Jan. 18 high of $274.66 to its 2018 low of $226.20 set on Feb. 9. The stock closed Friday, June 15, at $264.56, up 6% year to date and 3.7% below its 2018 high of $274.66 set on Jan. 18. FedEx shares have seen a strong gain of 17% from this low, with the stock above a "golden cross" on its daily chart and with a positive but overbought weekly chart.
Analysts expect FedEx to report earnings per share between $5.71 and $5.76 when the company releases results after the closing bell on Tuesday, June 19. Among 19 analysts who cover the stock, 16 rate it a strong buy, one rates it a buy and two rate it a hold. Strong consumer confidence, low unemployment and rising wages should continue to encourage online shopping and thus keep demand strong for package deliveries. (See also: FedEx Stock May Soar to New Heights.)
The daily chart for FedExCourtesy of MetaStock Xenith
FedEx began 2018 well above a "golden cross" that was confirmed back on April 26, 2016, when the stock closed at $165.56. A "golden cross" occurs when the 50-day simple moving average rises above the 200-day simple moving and indicates that higher prices lie ahead, and this positive signal has been in play year to date, with the 50-day and 200-day simple moving averages of $249.55 and $240.15, respectively. At the base of the chart are two horizontal lines that are my semiannual and annual value levels of $233.73 and $232.09, respectively, which provided buying opportunities on Feb. 9 and between March 23 and April 6. My quarterly pivot of $255.16 was a magnet between April 18 and June 7. The stock has been trading around my June pivot of $163.59 since June 12.
The weekly chart for FedExCourtesy of MetaStock Xenith
The weekly chart for FedEx is positive but overbought, with the stock above its five-week modified moving average of $253.84 and well above its 200-week simple moving average of $185.94, which is the "reversion to the mean," last tested during the week of Feb. 26, 2016, when the average was $132.12. The 12 x 3 x 3 weekly slow stochastic reading ended last week at 80.43, up from 74.41 on June 8, which is now above the overbought threshold of 80.00.
Given these charts and analysis, investors should buy FedEx shares on weakness to my semiannual and annual value levels at $233.75 and $232.09, respectively, and reduce holdings on strength to my projected monthly risky level of $277.10. (For more, see: Bernstein: UPS, FedEx Safe From Amazon Flex.)