Fedex Corp (FDX) shares advanced in after-hours trade when the company reported a strong second-quarter and guided solid earnings growth for the second half of 2016. The shipping company reported second quarter profit at an adjusted $2.58 a share, a significant beat to the $2.51 forecast. Revenue grew 5% from a year earlier and came in with a $12.5 billion print, in line with the eyed $12.4 billion. The company also affirmed 2016 earnings at $10.40-$10.90. The stock continued to rally during the upbeat conference call following the earnings release.
The bullish market reaction took price to the 50- and 100- day SMA(s) zone. Price action on the FDX daily chart shows that the bullish move appears to be firmly in place following the key low made on December 14th. Bullish momentum may not see resistance until the $164.17 level, which is where the 200-day SMA is currently trading.
If the bullish move extends above the 200-day SMA, further upside could target the $171.50 zone. It is around that area that price could form both a bearish Gartley pattern. Point D is targeted with the 127.2% Fibonacci expansion level of the B to C leg. If the bullish rebound continues and invalidates the potential reversal patterns, upside may target the $179 to $185 region.
If we see price stall and bearish momentum, only a break of the $148 level would open the door for further consolidation. Deeper support may target the $140 support level.
The Trade: Buy FDX at $152, with a stop loss at $148 and a take profit at $164. The Risk/Reward Ratio is 1:3