Here’s your trade on Fed Ex ($FDX) – September 20, 2024
Dan Fitzpatrick here at StockMarketMentor.com. I want to look at FedEx ( NYSE: FDX ), for all the wrong reasons.
The company reported earnings, and let’s just say they delivered them to the wrong address, we’ll put it that way. A massive amount of volume was traded today. The average volume on this stock is about one and a half, 1.4 million shares, and 17 million changed hands today, so this was a massive, massive sell-off.
When a stock is down like this, down 15 percent, I’m looking for a rebound. I’m not predicting a rebound but I’m sure watching for one. I’ll go back to the daily chart. This came well outside three standard deviations at one point, and it is now, that’s this lower Bollinger Band. It’s like 99.9 percent of the time stocks are within the three standard deviations.
This is breaking a massive law of the universe, and the world could be at risk this weekend, this is such a big huge violation. I’ve felt a couple of tremors here in California, but that’s the way it goes. If it isn’t above a 7.0 on the Richter scale I don’t really even notice it. I’m exaggerating, but not by much.
Anyway, this thing is really, really crappy, this is the crappiest thing I’ve ever seen here on a stock like FedEx ( NYSE: FDX ), they ain’t going away. And so what we’re looking for here is a rebound. Now, I think there was a tendency among some traders, I’m sure, to just buy right at the open. Because, Oh my gosh, it’s down at 260.00, it’s holding.
I think the 200-day moving average was back here and this was where it was last night. Let me look at post-market, yes it’s about the same. But last night, after they reported, the stock was right at the 200-day moving average. I mentioned in our session this morning that I was tempted to buy it in the after-hours market last night because it was right at the 200, so why not, what could go wrong?
Well, the issue is, I have done that before, and virtually every single time that I’ve done that, I’ve lived to regret it. Because what happens to a stock after hours when they report earnings? After-hours can be vastly different than what happens the next morning. You can’t always predict that you’re going to get a rebound just because of some goofy moving average, stocks don’t work that way.
So you sit around and you wait. You see how the stock is trading when the market opens and it does not bounce. This is a 30-minute chart, if we look at a 5-minute chart, right from the get-go this thing fell and it just kept going lower, and lower, and lower. It wasn’t until noon, that the stock actually started trading back above the volume-weighted average price.
Well, what you can tell is that, if several hours go by before a stock starts moving back above the volume-weighted average price for the day, most of the trading has already taken place. Look at all this volume here, all this volume here, so all the selling is taking place and finally the stock’s lifting back up here.
It’s not because there’s this massive amount of buying as much as there’s just not enough selling, not enough sellers, not enough supply so the stock starts to drift up, but it doesn’t go very far. It basically just got back to where it opened before it started to drift lower again.
This is the point that I want to make when you see a stock like this, I call them slam plays. When you see a stock slam down like this, we saw this with CrowdStrike ( NASDAQ: CRWD ), several in a row, when you see a stock doing this, you don’t just want to jump in and try to catch that falling knife. Your hand can wind up being a butcher block and that never works out too well for the butcher block.
So you want to wait for clear evidence that not only is the selling done, but some buyers are coming in and snapping up this stock. And after the CrowdStrike ( NASDAQ: CRWD ) debacle there, it literally took over two weeks before the stock stayed like this final exhaustion gap down, all the selling was done, and then the stock reversed. Well, that was then, this is now. By the way, you can probably get CrowdStrike ( NASDAQ: CRWD ) going back up here.
With FedEx ( NYSE: FDX ), what I want to do is, I’m just going to sit and watch this stock. And maybe it will be a good stock to trade on Monday, maybe it won’t. But it will ultimately come back above this level. And so I just want to wait and see if I can catch the stock. Maybe it will drift down for a day or two, or three or four. Maybe it will come back down to test this level.
But when a stock has this kind of excursion in one day, you’re going to see a snapback at some point and I think you want to be there for it. So watch this level right now, if the stock, on Monday, runs back above 260.00, that’s where I’d be buying the stock, I wouldn’t be worried too much about this intraday high of 262.56 because that was done on light volume.
The big resistance level here is 260.00, and I’ll tell you exactly what I’m going to do before I sign off, I am setting an alert at 260.00. And if or when the stock pops above 260.00, I’m in.
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