FedEx Corporation (FDX), the worldwide package delivery giant, is set to benefit from higher shipping rates set in January and from a lower tax rate in effect under the new tax law. The company is set to report earnings after the closing bell on Tuesday, March 20. The stock closed Monday, March 19, at $249.61, statistically unchanged year to date and up 10.3% from its Feb. 9 low of $226.20. The stock set its all-time intraday high of $274.66 on Jan. 18 and is down 9.1% since then.
Analysts expect FedEx to deliver earnings per share of $3.17 when the company reports results on Tuesday. Analysts have noted that the package delivery giant and its Express, Ground, Freight and Home Delivery units implemented a 4.9% rate hike in the U.S., but they warn that higher costs in the Ground unit and high debt levels could be a drag. (See also: FedEx Seen Rising Over 20% as It Beats Amazon on Cost.)
The daily chart for FedEx
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 was obviously a successful strategy for investing in FedEx shares.
The stock has had closes below its 50-day simple moving average since Feb. 5, with this average now at $254.45. Strength since the Feb. 9 low has failed at my quarterly pivot of $253.79, which is the upper horizontal line. Weakness to the low of $226.20 held my semiannual and annual pivots of $253.75 and $232.09, respectively, as shown on the lower two horizontal lines.
The weekly chart for FedEx
The weekly chart for FedEx could be positive or negative at the end of this week depending upon the reaction to earnings. The stock is on the cusp of its five-week modified moving average of $249.34 and is well above its 200-week simple moving average of $179.98, 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 is projected to end the week at 48.51, slipping from 48.64 on March 16.
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 quarterly pivot of $253.79. (For more, see: UPS, FedEx Fears on Amazon Are Overblown: JPMorgan.)