FedEx ended off the day yesterday with some poor news. At the close of the market FedEx closed the day by releasing the earnings report for the last quarter just under forecast.
This morning in our Pre-Market session we are seeing the results of the earnings release from FedEx.
Revenue was estimated to be at $17.09B and fell short to $17.05B. Earnings Per share was forecasted to be sitting at $3.17 and came out at only $3.05.
When trading stocks there are three major factors that can play a role in the stocks movement; technical, fundamentals and news. Currently speaking this is a perfect blend of all three factors coming together . This is why we are seeing such a strong push from FedEx to the downside.
Based on the Fundamentals of the stock we see that revenue has dropped last quarter. We have seen Amazon disconnect a bit from FedEx and start looking into alternative options when it comes to shipping their products around the world.
FedEx has been struggling to show strength over the last year 3 of the last 6 earnings releases have been negative if not slightly toward the positive side. Let’s look at the chart.
Guys, this is the same chart I have been trading for the last few weeks. When you are marking up your charts and setting up your trends do not rush the movements.
Understanding the time frame you are trading on is essential for properly executing on the trades you are looking for.
We are seeing resistance horizontally at the $175 price level where based on the previous high we were unable to break above. The diagonal down trending channel that I have drawn from before is where the current channels resistance level is at.
If you look closely you can see how price touches the line and sits there. As price sits at that level there needs to be either increased volume or news to push the market in a specific direction. Today we are looking to see price drop and gap down towards our next channel support line.
I drew a small circle to show where price is going to open up around at the start of the trading day. If you noticed the news of poor earnings is making the stock drop down towards the next technical level.
This is why we factor technical, fundamental and news information together when trading U.S. Stocks.
They all work together and to say that one method is superior over the other is a fallacy that can result in bias trading. When you are trading with a personal bias over an analytical perspective you are trading based on emotions.
For those who have taken the short position or have opened put options prior to today, it would be the day to start looking for an exit. If you are not currently in a trade on FedEx entering a position now can involve tremendous risk. It is never suggested to rush into a trade as this is when poor mistakes are often made.
As price gaps down we need to be looking to see how price reacts to the sudden drop. Will there be increased buy volume entering the market to be able to secure positions of FedEx at a discounted rate?
Will we see investors dumping their shares in FedEx or potentially taking more defensive trading strategies.
What are you thoughts on how the market will react after the Massive Drop after FedEx Earnings release?