United Parcel Service Inc. - (UPS) - September 16, 2022
Only a few days after it finally returned to the Green Favored Zone of the SIA S&P 100 Index Report, United Parcel Service (UPS) could potentially drop right back out again based on aftermarket trading last night. UPS, which finished the day in 25th place, two spots away from the yellow zone, dropped 6.7% in aftermarket trading after its competitor FedEx (FDX) stunned the street with a big profit warning and withdrawing guidance. FedEx, which is already in the Red Zone, plunged 19.9% in aftermarket trading.
Since April of 2021, a bearish head and shoulders top pattern has been forming in United Parcel Service (UPS) shares. This has become more apparent in the last few weeks since a summer rally peaked at a lower high just above $200. This week, distribution has accelerated with the shares falling away from $200 resistance and breaking down through their 50-day moving average.
Initial downside support for the shares appears near $175, which could be tested or broken today based on overnight trading, followed by the $165 neckline where a breakdown would complete the pending head and shoulders pattern, and then closer to the $150 round number.
Since peaking back in February, United Parcel Service (UPS) shares have come under distribution. A summer rebound reclaimed some of the ground lost in a spring selloff, but in the end, the shares peaked earlier this month at another lower high, confirming that a new downtrend has commenced. In the last few days, the shares have fallen back under $200.00 and dropped toward $185.00, triggering a bearish High Pole Warning.
Aftermarket trading last night saw UPS drop toward $172.50, which is within a $164.45 to $174.50 initial zone of potential support between the June 2022 and October 2021 lows. A close below $167.70 would trigger a bearish double bottom pattern and confirm the start of a new downleg with next potential support between previous lows near $146.00 and the $150.00 round number. Initial resistance on a bounce may appear near $200.00 where a round number and a 3-box reversal converge.
UPS is still exhibiting strength relative to the asset classes for now with a bullish SMAX score of 6 but this has come down from 7 earlier this week and 8 in late August. A drop to 5 would turn the SMAX bearish.
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