18 October 2020 #AtThyConsiglioriBizAnalysis

FedEx - Part 2 of 10, As Inspired By Dave Schneider

I have a friend. He is the Number 1 Logistician in the world. Logistician? It is one who masters all the arts of logistics. You can't imagine how many.

2) Dave's second company who's stock he wants me to analyze is FedEx. When he told me that, my first response was an idiotic yawn. I foolishly thought, 'how different from UPS is the stock motion going to be?' I thought they'd be almost identical. Ha! It's fun to be so wrong.
3) Before I start showing you charts, let's talk about method. I'm essentially the exact opposite of a day trader or a TV talking head stock analyst. You have to let me go off for a moment. When I hear their daily analysis, the stock market did this today, for that reason...
4) I just, well, my head always explodes. They do NOT know that what they're saying is true. But, they say it as if they were physicists discussing Newton's 3 Laws of Motion. For ever action, there is an equal and opposite reaction. Now that's a Law. They speak "lawfully."
5) Okay, here's today's first chart. It's a 1 Year chart, which tends to be the SHORTEST time frame I care about. This one is blank, just the data. My next one will be marked up with my own easy lines. You will not disagree with my lines, I promise.
6) It's very important - I mean this now, so pay attention! - to look at any and every chart's scale. Scale effects EVERYTHING. If I were a statistician - I am NOT and don't you dare call me one! - I could lie to you with the scale of my charts like Old Nick himself.
7) This chart runs from 0 to 300. Oops! $0 to $300. That's actually a very interesting range for a stock price. In the coming charts, you'll see a VERY different scale. I cannot too strongly emphasize how important it is you learn to look and see a chart's scale. Heed me.
8) Assuming you're ready for my markup - oh, that's a term you need to know. I draw lines. Lots of them. There are two that are the most basic. Support and resistance. For now, I've decided support is blue, resistance is red. Not sure why. Here goes...
9) I gotta tell you I LOVE this chart. 3 periods. A flat resistance line at the end of last year through beginning of this year. Yo! Now that's interesting! Why was FedEx running about $160 or so for that 3rd of a year? Sadly, I'm not the guy to answer that question. Dave is.
10) We have to pause here on terms again. Technical and Fundamental. In my soul, I'm far more a Technical Analyst than I am a Fundamental. I LOVE numbers. But...I am NEVER satisfied by numbers alone. I need reasons. Technical is WHAT. Fundamental is WHY.
11) Hey, I'm a very proud man. If I decide to find out why FedEx trended at $160 for a 3rd of a year, I can. I am a damned fine Fundamental Analyst. I need you to hear me brag on that, okay? But, I am NO Logistician like Dave is. So...I'm running with my technicals for now...
12) Then...something happened for the 2nd 3rd of 2020's numbers, and that is obviously COVID. It's interesting that there was a drop. I didn't mark it up, but you can see it clearly. Why did the fall from $160 or so down to about $90 happen there? Very interesting.
13) Around April, we can see a new channel, gently rising from a low at well less than $100 up to a transition price hitting $150 again in August. I don't need Dave's wisdom to make a guess as to what happened there.
14) In August, we realized that COVID was going to hang out with us through the coming winter season. And, people - for whatever reason - are ordering more and more online, shopping less and less in person. A new COVID support line exploded well past $250.
15) Let's slow down. A year goes by very rapidly. Here's the FedEx 5 Year story. And wow, what a story we see. As a technician, I have to wonder again, why? Why is this story SO different from UPS? Look at this and draw your own lines in your mind, yes?
16) Here's my analysis of these numbers. Again, and so interestly, we see 3 distinct periods, obvious to my eye at least. There are two channels and an explosion upward. Clearly, FedEx did well at the beginning of the Trump Economy, through the end of 2018.
17) Why did it peak so dramatically and then descend so clearly all the way through the beginning of the COVID crisis? That's a very interesting descent. And if you look back at UPS you see the precise opposite story during the exact same period. Look again...
18) Don't you love a mystery, a great story? I sure do. Why is UPS 5 Year Chart such a steady Eddy, while FedEx's 5 Years is such an obvious up and down? If we're going to understand that story, we'll need to know some fundamentals, to be sure.
19) Now let's look even longer. Now this is an American success story. This is hard fought wealth. We're looking back to about 1980. It's well along toward 1996 before we see the rise begin to show itself. If you bought in 1980, you didn't make much before 2000.
20) This is my favorite chart of the day. Check this out! What I love MOST is the long term resistance line from about 1998 pushed forward. Now that's interesting! There are 4 support lines on this chart. Why does one plummet? I want to know! Yet, in spite of that...
21) In spite of a single plummeting support line, the long term resistance ling from about 1998 till now is the VERY MOST interesting thing on this chart. A speculator has to ask and this question. Will that long, long resistance line continue?
22) Another way to ask the same question is this. We have 3 successive support lines going up. We have a 4rth plummeting. Can we establish a new 5th support line rising, again? Obviously Fed Ex spike hugely in 2020. Will that spike, all the way up to almost $300, hold?
23) By way of counsel...I prefer UPS to this. It's wonderful to watch an exciting story on TV. In stocks, we prefer Steady Eddys vastly over titillating Rebels Without A Cause. On a purely technical basis, I'm thinking, UPS kicks FedEx's ass all around the block.
24) I believe there's a deeper story we're starting to follow. Logistics. Supply Chain. What they really mean is the human species' method of survival, today. I can't grow crops or hunt prey to feed my family. I wish I could.
25) I can't. I'm no hunter, fisherman or crop grower. Hell, I don't even have a garden. And no, I have not stockpiled either, idiot me. I need UPS and FedEx. I love my local grocery stores, more now than ever. But I don't trust them. Do you?
Thread ends at #25.

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