FDX trade ideas
Bullish update on FDXFDX has started another rally that has more to go short term and long term. We need to move above 185 to end something. We are not there yet thus rally not over. How exactly we will get there is another story.
Short term it appears we need at least another push up but it would look better the way I labeled the climb as shown here on this weekly chart. Doing just that going into May then that would be a case of "Sell in May and go Away".
Can FedEx Deliver Profits?Based on the EMAs, Resistance 179.69, then down to 144 EMA 175.55 for (1) Support prior to earnings, which can cause a drop to the 377 EMA at 168.17 (Trefis Price 157.-12%) This is an options play set up since the dividend payout is when January Options expire. I'd expect a drop after earnings, then a gradual rise in price before dropping. Gas prices might be breaking record lows to boost profits, but Net Debt drops per share price to $69. Ground Shipment drives up per share price to 137.82. FedEx might integrate Netgas in 2015 that will help the bottom line, but not in the first quarter in 2015. EBITDA margins down from 16.8% to 14.9% (2011) due to increased fuel surcharges; this could be a repeat midway into 2015.
EARNINGS PLAYS THIS COMING WEEK -- FDX, ORCLOnly two earnings plays stick out to me this coming week -- FDX and ORCL, both of which announce earnings on 12/16 (Wednesday) after market close, so look to put on setups before NY close on Wednesday.
Currently, FDX's 52 week IVR is at 54 (IV 34), which isn't stellar, but it's at 92 for the past six months. Moreover, there is pretty good credit to be had whether you go short strangle or iron condor, so I imagine I'll play that one way or another if the IV sticks in there.
ORCL (IVR 75/IV 35) isn't looking all that hot, frankly, because I can't get 1.00 in credit with either a short strangle or iron condor (a Dec 24 34.5/39.5 short strangle will only get you a .61 credit at the mid price right now, which isn't anything to go crazy over; a same expiry iron condor just isn't worth it). Nevertheless, we could see a greater volatility pop toward earnings that makes it a little bit more worthwhile such that I'll play just because there isn't that much else worthwhile to do ... .
(Of course, there is that all FOMC thing next week, too).
Update on FDXIf you look at our chart of monthly FDX, the big picture hasn't changed, long term the rally is not over and once current correction is done, FDX will move back above 184.
I just don't know now if the sideways action is still a bullish triangle or a bearish one. Both are possibles. Corrections are complex patterns.
As long 166 holds, the current labeling holds with a rally in the cards pretty soon.
As long 164 holds the bullish triangle is still unfolding, just taking its time. That would be wave C and more sideways action will be needed before take off.
But if we breach 164 then it is a bearish triangle that should push prices lower towards 158.
FDX revisitedSince last update, FDX went lower without negating its bullish triangle and now we think it is over. Moving above the upper trendline will confirm that scenario. Target will be published once we get above that resistance.
Although not expected, moving below 170 will mean a bit more weakness towards 160 before moving back up as shown in the monthly chart linked below.
In the event we are right and and are indeed sprinting out of a triangle, that would be quite foretelling for the future as triangles are structures preceding the last move in a sequence. For FDX we think that sequence started in late 2012 and once over one has to expect a multi-month choppy correction.
FDX Bullish Contracting triangleFDX appears to be moving sideways in a bullish contracting triangle that should lead to new high pretty soon. Over or not, current price action is choppy and sure looks like as a series of "three's" better labeled as a running triangle ( or a bullish flag ).As triangles precede the last move up within a wave, that would mean once FDX breaks out on the upside one will have to expect some kind of top follow by a pull back that could be meaningful.
FDX moving higher. Proxy for the stock market ?I am showing you a nice monthly chart of Fedex not to demonstrate my labeling skill but only to make one point : The bulls are running the parade and it's not over yet. Some might argue that one stock is not a good proxy for the overall equity market but a rising tide lift all boats and I found that stocks with the right look can often be used as a warning signal on what's coming. Actually in 2007 FDX not only rolled over before the overall market but way before the Trannies. Let's see if history will repeat itself. For now FDX is in a consolidation that could be over but with current overall market showing sign of exhaustion I would not be surprised if FDX drops back a bit maybe towards 160 before resuming its march higher. Then later, probably this fall, a larger decline should emerge scaring people away before sucking them all back in for the final rally to end this large advance from the 2009 low. For now, the when and the where are too difficult to predict but until further notice I am bullish FDX. Stay tuned
