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Stock Selection (US shares): FedEx vulnerable for a major bearish breakdown

FedEx Corp (FDX)



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Key technical elements

  • FedEx, a global courier delivery services company that is dependent on the business cycle of the global economy thus its share price movement is likely to be sensitive to the outcome of the latest round of trade negotiation talk between U.S and China where an escalation in trade tensions can trigger a deceleration in international trading volumes.
  • The 30% rally seen from its 26 Dec 2018 low of 150.94 has stalled at key medium-term resistance of 199.32 which is defined by the median line of a major descending channel in place since 18 Jan 2018 all-time high, 38.2% Fibonacci retracement of the major decline from 18 Jan 2018 high to 26 Dec 2018 low and close to the 200-day Moving Average.
  • Right now, its price action is testing the 178.10 ascending support that has held every pull-back since 26 Dec 2018 low.
  • But medium-term momentum has turned negative where the daily RSI oscillator has broken below a similar parallel ascending support at the 50 level.
  • Relative strength analysis from the ratio of FedEx against its S&P Industrials Sector ETF (XLI) has continued to exhibit medium-term weakness/underperformance.

Key Levels (1 to 3 weeks)

Intermediate resistance: 186.10

Pivot (key resistance): 199.32

Supports: 178.10, 162.30 & 145.10/140.00

Next resistance: 226.20/231.80

Conclusion

The share price of FedEx appears vulnerable for a bearish breakdown below the 199.32 key medium-term pivotal resistance. A daily close below the 162.30 is likely to see a potential multi-week impulsive downleg to target the 162.30 major support (secular ascending trendline in place since Mar 2009 low) and a break below it opens up scope for a further down move towards 145.10/140.00 next (lower boundary of the major descending channel & Fibonacci expansion).

On the other hand, a daily close above 199.32 invalidates the bearish scenario for a squeeze up to retest the key long-term resistance zone at 226.20/231.80 (61.8% Fibonacci retracement of major decline from 18 Jan 2018 high to 26 Dec 2018 low & upper boundary of the major descending channel).

Charts are from eSignal 



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