FedEx Corporation (FDX), the worldwide package delivery giant, set its all-time intraday high of $274.66 on Jan. 18 and then suffered a 17.6% correction to a low of $226.20 on Feb. 9, when the stock market set a bottom. The company reported better-than-expected earnings on March 20, but the stock slumped to a test of its 200-day simple moving average of $229.46, which proved to be a buying opportunity as the daily chart below showed the stock above a "golden cross." The stock set a secondary high of $266.67 on June 12. A line drawn from the January high through this June high is the 2018 downtrend.
When FedEx released its next earnings report on June 19, it beat estimates again, but weak guidance caused its second correction of 2018 as the stock fell by 16.5% from the June 12 high to its 2018 low of $222.44 on June 28. Year-to-date stability was helped by the "power of the pivot." The year began with my annual value level of $232.09, which was first tested on Feb. 9. As a pivot, it became a magnet that was crossed several times into July 18.
The stock closed Friday, Sept. 14, at $255.44, up 2.4% year to date and 7% below its 2018 high of $274.66 set on Jan. 18. The stock has had a strong gain of 14.8% from its 2018 low $222.44 set on June 28. Analysts expect FedEx to report earnings per share of $3.83 to $3.84 when the company discloses results after the closing bell on Monday, Sept. 17. (See also: UPS, FedEx to Outperform: Bernstein Analysts.)
The daily chart for FedExCourtesy of MetaStock Xenith
FedEx is under a downtrend that connects the January and June highs, with this declining line now at $261.40, which should be a barrier following the company's earnings report released after the close today. The horizontal lines below the market are my monthly, semiannual and annual value levels of $240.72, $237.96 and $232.09, respectively. The $240.72 level provided a buying opportunity on Sept. 5. Above the downtrend and above the chart is my quarterly risky level of $279.93.
The weekly chart for FedExCourtesy of MetaStock Xenith
The weekly chart for FedEx is positive, with the stock above its five-week modified moving average of $245.93 and well above its 200-week simple moving average of $191.24, 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 54.44, up from 48.50 on Sept. 7.
Given these charts and analysis, investors should buy FedEx shares on weakness to my monthly, semiannual and annual value levels at $240.72, $237.96 and $232.09, respectively, and reduce holdings on strength to my quarterly risky level of $279.93. (For more, see: UPS vs. FedEx: Comparing Business Models and Strategies.)