One of the best stocks to gauge the health of the economy is FedEx.
If the demand for transportation increases then it’s a sign that businesses are growing, e-commerce is expanding, and the overall US economy should be in good shape.
This is why I occasionally pull up FedEx stock to see what it’s doing. Well recently I noticed FDX is in the middle of a pretty strong bull channel. Here is what the weekly chart looks like. I have drawn a blue channel for reference.
As you can see the stock has been trading in this channel since last summer. From June 2023 to now the stock has bounced 5 times off the same upward sloping support line, which is the bottom of the channel.
My assumption is that it will continue to trade in this channel since the market tends to follow a pattern, until that pattern breaks. Since the stock is near the bottom of the channel, I would expect it to climb up to the channel top, around $315/share depending on how long it takes.
Another bullish sign is that in the monthly chart, the stock has not closed below the 21 exponential moving average in a long time.
So if you believe the stock will rise, then buying some shares at the current price would be reasonable setup for a short to medium term trade. I would set the stop loss to the bottom of the channel, the support line. If FDX falls out of the channel then it is likely heading a lot lower.
If the stock does go up then I would take some profits when it reaches the top of the bull channel, and leave some shares to catch potentially higher prices.
This way you only risk losing about $10 if you’re wrong. But you can potentially make $48 or more if the trade goes your way. Seems like a decent risk to reward trade.
I’ll post an update here once I make my own trade soon. I’ll probably use an options strategy.
The details of my trade will be like a FedEx parcel. You’ll get it in a couple of days. 😀
Speaking of courier company jokes. The good ones always have the best delivery. 😅
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