What you need to know
- FedEx’s shares surged in extended trading Thursday, after the shipping company announced its plans to spin-off its freight division as a public corporation. This announcement overshadowed a lower outlook for full year.
- Since July of last year, the stock price has been rising in a steady ascending pattern. Recently there was heightened interest for buying around moving averages.
- Investors should watch key overhead areas on FedEx's chart around $305 and $370, while also monitoring important support levels near $278 and $255.
FedEx’s (FDX) stock rose dramatically in Thursday extended trading after the shipping company announced its plans to spin out its freight operations as a new public corporation, overshadowing a lowered forecast for this year.
Analysts say that by combining the Express and Ground Units and streamlining the operations of FedEx, the spinoff could create up to $20 Billion in shareholder values.
On Thursday night, the company also lowered its outlook for fiscal 2025, noting, among other things, that conditions are still challenging due in part to a weaker business customer demand. Nevertheless, December volumes are so much ahead of expectations.
FedEx shares have gained 9% since the start of the year as of Thursday’s close, significantly trailing the S&P 500’s 23% return over the same period. In extended trading, the stock gained nearly 9%. It now stands at $300.
We will examine FedEx’s graph and use technical analysis to determine important price levels that you should be aware of after a news event.
Ascending Channel in Play
FedEx has oscillated in an orderly ascending pattern since last July. This chart pattern is composed of two upward-sloping trendlines drawn above and under a price range that marks established support and opposition levels.
The stock’s trading volume reached its highest since September at the end of last week, as it found interest in buying around the 50- and the 200-day moving averages.
In order to identify potential follow-through buyers, let’s look at two important overhead areas in FedEx chart. Let’s also note several key levels of support to be monitored during retracements.
Keep an eye on the following areas:
Around $305 is the first level of interest. A trendline may be forming that links the August-September countertrend highs on the chart with the pivotal November high.
Investors can forecast a target for the upside above the ascending trend channel using the measure move technique. Chart watchers also refer to this as the “measuring principle”.
It works by adding the amount calculated as the difference between the two trendlines of the pattern to the top channel trendline. If we take the example of adding $50 to $320 to get a $370 target, this is 34% over Thursday’s price. Investors may choose to sell at that point.
Watch for Important Support Levels
Investors who are watching for pullbacks will first look at the $278 area, just above the 200 day MA. The stock is expected to start Friday above this level, but retests may bring in buyers near the troughs formed on the chart between August and September.
FedEx could return to its lower support level near $255 if it sells below this price. Investors with a longer-term perspective may look for buy-and hold opportunities near the multi-month trendline which links similar price points in the chart going back to last July.
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According to the article, as of its date of publication, the author did not hold any of these securities.
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