Here’s How I’d Play FedEx Before Earning

Shares of package delivery giant FedEx (FDX) were higher in early trading Thursday after the market closed ahead of their third-quarter earnings numbers. Additionally Stifel raised its fundamental opinion of the firm to ‘Buy’ recommendation with a $222 price target.

Let’s track the charts.

In this daily bar chart of FDX, below, I can see a mixed picture. Prices have recovered from the late September nadir but the move has been less than stellar. Trading volume does not seem to have extended on the advance and is negative for traditional chart watchers.

The on-balance-volume (OBV) line narrows from October to early February in an uneven display of more aggressive buying. The 50-day moving average is sloping positively, but the 200-day line is still trying to move lower. The Moving Average Convergence Divergence (MACD) oscillator is showing weakness since the beginning of February and is nearing the zero line.

In this weekly Japanese candlestick chart of FDX, below, I can see that the price is in a long term descending sloping channel. The price is below the 40-week EMA, hence positive. The weekly trading volume shows a decline from October and is not a positive development.

The weekly OBV line shows only a very slight increase from the October low. The MACD oscillator has risen above the zero line but has been declining in recent weeks.

In this daily Point and Figure chart of FDX, I can see a potential downside price target in the $169 area. A trade at $220 is needed to refresh the uptrend.

In this weekly point and figure chart of FDX, I see a similar setup to the daily chart above. A downside price target in the $169 area and a weekly trade at $220 is needed for a reversal on the charts.

Bottom Line Strategy: FDX price has indeed recovered from its late September lows, but the indicators are not particularly strong. I will not be an aggressive buyer of FDX before earnings. I’ll probably reduce my long exposures.