Chart Of The Day: FedEx Flashes Rare Bearish Signal Ahead Of Earnings Report |


After a stellar interval throughout which freight and logistics large FedEx (NYSE:) noticed a for its providers through the pandemic, the Memphis, Tennesse-based parcel shipper is now struggling to develop earnings amid evolving social restrictions and a altering market. As distant work continues trending, the corporate has been attempting to restructure its business, an effort that was initiated even earlier than the COVID outbreak began.

Even as the corporate continues to adapt to the constraints of this new financial system, traders shall be watching FedEx’s Q1 fiscal 2022 earnings report, launched tomorrow after the market shut, to see if any of the corporate’s adjustments have had an impact through the earlier quarter.

The consensus forecast for FedEx is for the corporate to point out an EPS of $4.94 on income of $21.9 billion. That can be considerably greater than final yr’s , throughout which earnings got here in at $4.87 EPS and a $19.Three billion income.

Last yr’s outcomes handily beat expectations of $2.7 EPS, $19.Three billion income. But at that stage of the pandemic, FedEx was capable of shock since there was a low bar set through the peak of the pandemic. For comparability, earnings estimates for the corresponding quarter in 2019 have been $3.15 EPS on $17.06 billion, although the corporate fell wanting that on the time.

Will FedEx shock once more even when expectations stay decrease?

UBS analyst Thomas Wadewitz doesn’t suppose so. He reduced his price target on the inventory, which closed on Friday at $255.22, to $380 from $397. That nonetheless leaves an implied 47.2% upside within the following 12 months. However, Wadewitz sees the current spike in costs and disruption to the worldwide provide chain as hurting the earlier quarter’s outcomes.

From a technical perspective, FedEx triggered a bearish sign in probably the most inopportune time for bulls, proper forward of the corporate’s earnings report.

The current selloff in its shares dragged down the 50 DMA under the 200 DMA, making a Death Cross. That means the common efficiency over the past 50 buying and selling days weakened, offering worse returns than the common of the earlier 200 classes.

Moreover, this cross is especially “deathly,” given that even the 200 DMA has been sinking. Notice how it curves below the dotted red line, slumping from its July 30 peak. That means the average share price over the past 50 days has been dismal the stock is even underperforming its own falling 200 DMA.

If the textbook bearish prediction of a Death Cross follows through, the stock could be in even worse trouble.

FDX Daily

If the price drops below $234.82, the Jan. 29 low, the stock may top out. That would imply a near-$85 plummet from the point of breakout. That’s a 36% plunge.

Trading Strategies

Conservative traders should wait for the price to top out, after which it would should below $230 to filter out a bear-trap, then provide a return move to retest the presumed resistance at the January low, before risking a short position.

Moderate traders would sell on rallies when they identify exhaustion.

Aggressive traders could short now, provided they own the added risk proportionate to the higher rewards which could come by moving before the rest of the market.

Trade Sample – Aggressive Short Set-Up

  • Entry: $255
  • Stop-Loss: $260
  • Risk: $5
  • Target: $235
  • Reward: $20
  • Risk:Reward Ratio: 1:4

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