Event: Fedex (FDX) is scheduled to report fiscal Q1 results Wednesday September 16th prior to the open. The options market is implying about a 3.5% one day move which is rich to the 2.9% average move over the last 4 qtrs.
A quick look at the year to date shows the stock’s consolidation between $170 and $180 for the better part of the year. And then a breakdown in August’s culminating with the precipitous drop from $170 to as low as $130 on the crazy open on August 24th. The stock obviously recovered, and has now been straddling $150 for the last few weeks. It sits nearly 20% from its 52 week and all time highs made in June:
The two year chart below shows how almost to a dime the stock went right to long term support at $130 before bouncing on Aug 24th:
The ten year chart below shows how important the $120 level is in terms of long term support:
So why do we keep expanding the range of the charts in terms of time? The tight consolidation of 2015 (after more than doubling from its lows in 2013) demonstrates a stalling of what was an epic rally from FDX’s 2009 financial crisis lows, to the recent highs. The stock was up almost 450% during that time, doubling the performance of the S&P500. But just as stocks have the ability to overshoot the broad market on the upside (as FDX did since 2009) they have the ability to do so on the downside.
FDX is an interesting stock to keep an eye on to get a sense of whether the bull market of the last 6 years has hit hit serious speedbumps. The stock and the company have been subject to almost every bull market trend during that time period: large share buybacks, levered to reflation of global growth, benefits from low oil, the target of activist investors etc, etc. Despite the stock’s very reasonable valuation to expected growth, if that expected growth does not materialize it could find itself re-testing the August lows. In the very near term, $160 or $140 seem very likely.
We will take a look at specific trades into the print and will update on the site.