FedEx's chart certainly looks a lot different than it did back when I posted it in September. Back then it was making new all-time highs in the low 80s. It continued up to the $100 level and tested that level a few times. In that process it created a double top pattern. Although the stock has found support in the low 80s it's tough for me to get bullish about any stock that's under both its 50 and 200-day moving averages. (Note that FDX will make a death cross in a few days.)
Assuming that FDX is considered a cyclical stock, I suspect this one is headed lower with the rest of that segment. My question is whether during the double-top there was any techniacl justification for giving a short a try then?
Duru, Michael's chart shows a negative OBV divergence at the second peak. That increases the probabilities that the trend is reversing.
Duru,
Shorting near the top? Never a good idea if you ask me.
Duru, regarding evidence of an opportunity to short near the 2nd portion of the double top, there was ample evidence, but you have to really analyze the data carefully.
On March 3, FDX broke out of a 10 1/2 week consolidation (it actually looked like a cup w/handle). The volume on Mar. 3 was anemic. The 2nd day of the breakout the volume did increase from the day before, but it was just average. After that initial 2 day climb, the stock pulled back, as many stock often do after a breakout. The key was the volume on the ensuing attempt to break free from that short pullback. The volume on March 14 was weaker than the initial 2 days of the breakout. That told you that the big money was indeed NOT coming to the party. On March 15 through 18, the stock fell on invcreasing volume to the downside every day. The initial slow volume on the breakout was your first clue, but the huge volume increase on the downside was the death knell. As far as other indicators, the CCI was rolling under the 100 level right around the time the stock broke down.
The OBV divergence is a good clue, thanks. Alex, did you mean shorting near the top is not a good idea, or that trying to predict tops is not a good idea? I certainly believe the latter, but it is instructive to look back and note whether there were any signals to short something before most of the downside money has already been made...
Thanks, Todd! Great insight.