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May 16, 2005
Fedex Leads Lower
Weakness in Fedex is not a good sign for the transport group, the market and the economy. As the movers and shakers of world-wide trade, freight companies form the backbone of the economy. This makes Fedex (FDX), UPS, Yellow (YELL) and JP Hunt (JBHT) leading economic indicators. These highly cyclical stocks advanced despite the rise in oil prices. Now that oil prices have started falling, these stocks have turned weak and started leading the market lower. These stocks should be happy that oil is falling and this blatant weakness is not a good sign.
Fedex (FDX) broke double top support with a high volume decline in mid April. Broken support turned into resistance around 90 as the stock consolidated the last few weeks. The pattern looks like a flag (gray oval) and a move below the April low opens the door to the mid 70s (green oval). As long as this stock remains below 90, the outlook for the group (transports), the market (SPX) and the economy is negative.
Posted by Arthur B. Hill at May 16, 2005 03:21 AM