FedEx (FDX) The stock is seeing its biggest one-day drop in decades, with shares down more than 22% at the latest check.
Inventory is destroyed after an update from package delivery giant Memphis. Preliminary first-quarter results and earnings warning are quite disappointing for investors.
The company said it expects fiscal first-quarter earnings to approach $3.44 per share, contravening a consensus estimate of $5.14 per share. Management also withdrew its full-year earnings guidance.
“Global trading volumes declined as macroeconomic trends worsened significantly later in the quarter, both internationally and in the United States,” the company explained.
As a result, United’s rival Parcel Service (UBS) The stock is down about 5% in the news today.
On top of that, investors and analysts are concerned about what FedEx messages could mean for the broader economy.
This action is reminiscent of price action in May, when negative news emerged from Walmart (WMT) And the goal (TGT) It caused massive falls in stocks, but also the stock market in general as investors settled management’s comments and applied them to other parts of the economy.
Let’s look at the FedEx stock setup.
FedEx Stock Trading
Some argue that FedEx is not a stock that can be bought on a dip. And with today’s price action, it’s hard to argue with that logic.
When I look at the chart, the $153 area is an area of interest for a potential bounce, but not a “this is the bottom” type of bounce. It is just a bearish extension area from the last range that could provide a technically driven bounce.
The real potential support area is located between $138 and $145.
While this is a fairly broad scope to work with, investors out there are not looking at just the downside stretch. Instead, they are looking at the 78.6% retracement from the all-time high to the lowest, the 200-month moving average and the gap-filling level at $140.75.
This area is where the bulls need to see a FedEx stock bring in a show. If you can’t, the next area of support won’t be entirely clear. The $125 level may attract some buyers.
Management’s comments were not inspiring. The CEOs didn’t say the first quarter was bad or the first quarter was bad but the rest of the year looks good.
They said the first quarter was bad and they weren’t quite sure what to do with the rest of the year.
On the upside, I’m seeing $175, $185, and then $200, with the last of this lineup being a strong area of interest. Having said that, I don’t see it getting there any time soon.