Replies to post #4715 on Your Economy (No Politics) (YE1)

[david_3011]

Chart Talk: Shorting FDX for Personal Reasons

I didn’t think it was appropriate to document this trade on my Trade Journal. As I’ve mentioned before, I don’t like to document short sales in the public Although I personally couldn’t care less if someone shorted the stocks I own, it’s such an emotional issue for most share holders. In addition to that this is really a personal issue. Therefore, I will not speak of how well I did or did not do with this trade. Instead, I’d like to share what I see technically on FDX. Let’s take a look at this chart I prepared.



When FDX was really on the move, it’s moving ahead of the Dow Transport Index (green line). This was what happened in January and February. It topped out in early March. Subsequently, FDX dropped below both the 50-day and the 200-day simple moving averages (red circles) within a month.

Then, on May 16, its 50-day SMA crossed below the 200-day SMA. Technically this was called the “Death Cross”, which signals a major shift of momentum and direction. Coincidentally, this happened to be the time when FDX started moving back up again. But, the move up was below the overall uptrend of the Dow Transports Index.

By the way, for investors who didn’t heed the crossover of the 50-day and the 200-day SMA’s, this small up move turned out to be a bear trap. They thought that FDX had already bottomed and started buying. However, from the low positive buying volume, we can tell these buyers were mostly retail investors.

I drew a rectangular box that helps identify the price movement in the 2 days following the WSJ report about FDX’s management turning this company into their own private FBI. Both were down days. Bullwinkle, this tells us that we’re not the only 2 nutcases feeling this way about FDX.

And now, we’ve had 4 big selloff sessions in a row this week with tremendous rising volume. The only question is whether the huge surge of volume on the selloff on Thursday was the final blowoff. If it were, then the price should start to move upward soon.

For me, this is going to be a long term “Sell” and hold. So, we’ll see....

Here’s that original post of mine again incase you missed it.
http://www.investorshub.com/boards/read_msg.asp?message_id=6492720