Friday, July 11, 2008

Fedex Corp. - Heading for $40 ?

I want to bring your attention to the chart of Fedex-ticker FDX (chart above). As regular readers know I value a longer term chart much more than shorter duration ie. weekly more than daily and monthly more than weekly. That being said, the chart above of FDX is a monthly view and take my word, it is not a pretty site.

As my notes indicate, 3 significant developments have occurred which the bulls should not take lightly. A long term trend line (green) has been broken. Next a short term corrective, bear flag, has broken to the downside. Lastly, a massive head and shoulders formation, similar to the one I have detailed with Deutsche Bank, has broken it's neckline.

The head of the formation is at $120.90 the neckline was broken at about $80.50.
We now take the distance from the head to the neckline. (120.90-80.50=40.40).
We now take the neckline break and subtract the number above. (80.50-40.40=40.10)

This is how I get an approximate target level of 40.10.

Think it cannot happen? I suggest you think again. Remember now, I don't want it to happen, I think Fedex is a great outfit, you just gotta love the story of a company whose formative business plan was based on a rejected grad school thesis, but you must respect what the charts are telling you. And this chart is telling me it is heading down !

That being said. I am not jumping in here. I am on high alert for a rally into the 80-82 level. Truth be told I should have been all over this puppy when the bear flag lower boundary was broken but such is trading when you do not have a 'black box'.


Well, we received news that the Fed window being open to the GSE's was in fact a rumor which was spread by, in my opinion, longs caught with their pants down and margin clerks chasing them, and trying to exit. Funny how quickly CNBC has guests at the ready to pillorize the oil speculators the minute rumors of Israeli jets doing maneuvers are proven wrong, yet those same guests are mysteriously absent regarding Fed window rumors. Comical, truly comical how biased mainstream financial media and their reporting has become. Beholden to Wall St., no other way to put it.

You want to know what's going on, you better be surfing the blogosphere reading fabulous blogs, where real analysis is being done. Sites, like the following;

RGE Monitor by Nouriel Roubini

Financial Armageddon by Michael Panzner

Mish's Global Economic Trend Analysis by Mike Shedlock

Market Ticker by Karl Denninger

Mr. Mortgage

Boom Bust Blog by Reggie Middleton

Life After the Oil Crash by Matt Savinar

These are just a few, but these guys were all over the current crisis, credit and energy, that we find ourselves in. They saw it coming and were WAY OUT IN FRONT !!

They are not perma-bears, rather they are realists who upon observation of indisputable facts, are calling it like they see it. Some, no check that, many just don't want to hear negative news. They want to drink the Larry Kudlow kool-aid, put on the Dennis Kneale nirvanic rose-colored glasses and bumble along pretending all is well, meanwhile mocking and ridiculing anyone who dissents.

If the above description happens to apply to you, I highly recommend you visit the above sites, read some of their archived posts and get intimately acquainted with what is REALLY going on around you. Better late than never !

Housekeeping notes;

I was stopped out of 1 unit of SKF at $169.60 during the Fannie/Freddie rumor fed run up, for a profit of $65.70 and which now leaves me with 1 unit long.

Good speculating to you all and always remember that "an investor is a speculator who made a mistake and will not admit it".

Open Positions:
Long 6 units Currencyshares Japanese Yen ticker FXY @ $88.55 stop at $91.40
Long 3 units Ultrashort Dow DXD@ $50.12 stops $62.22/60.49/58.62
Long 1 unit Ultrashort Financials SKF @ $103.90 stop $161.72
Long 3 units Currencyshares Swiss Franc ticker FXF @ $97.35 stop at $93.82
Long 1 units Ultrashort ReEstate ticker SRS @ $88.95 stop $92.72
Long 1 unit Ultrashort QQQ ticker QID @ $37.05 stop at $41.91
Long 1 unit Ultrashort S&P ticker SDS @ $57.20 stop $61.57
Long 2 units Hecla Mining ticker HL @ $8.50 stop at $7.16
Long 2 units Kinross Gold ticker KGC @ $18.93 stop at $17.56
Long 1 unit Ultrashort 20yr Treasury ticker TBT @ $68.70 stop at $65.69
Short 1 unit Daimler AG ticker DAI @ $86.20 stop at $65.94
Short 2 units Brinker Int'al ticker EAT @ $20.07 stop at $19.64
Short 2 units Darden ticker DRI @ $36.35 stop at $35.36
Short 1 unit Lehman ticker LEH @ $43.70 stop at $24.43
Short 2 units Deutsche Bank ticker DB @ $117.03 stops at $93.37/88.34
Short 1 unit of Visa ticker V @ $86.25 stop at $80.16
Short 1 unit HSBC ticker HBC @ $83.23 stop at $80.53
Short 2 units of Netflix ticker NFLX @ $30.35 stop at $29.43
Short 1 unit of IBM ticker IBM @ $122.80 stop at $126.14

2 comments:

steve said...

I'm a firm believer n much of your strategy, and hold a number of the same positions. Just one thing though...do you have no concerns about the stability of the agents behind any of the instruments you are trading? For instance, if Lehman goes down, what happens to the ETFs they are running? If not the ones which are long a basket of stocks, then the inverse ones based on index contracts and commercial paper?

If you are, as you imply in this post, thinking that what we are in for a beyond a "normal" recession, and that finance entities are at the epicenter, then at what point to you clear out your account and go into either a Treasury Direct account to hold short paper, or over to a "gold for delivery" seller?

For that matter, I need a recommendation of where to move my Brokerage account. I'm making money shorting Wachovia, but it would be a pretty stupid outcome for me to still have my brokerage account there when the FDIC arrives.

Harleydog said...

Steve,

thx for stopping by. Spread your $$ around. remember that your positions are not guaranteed by the broker but the underlying issuer.

In the case of ETF's ie.lehman long bond TLT/TBT they are the trustee/agent rather than a gurarantor. friends have indicated that the exchanges have backups in place but I will check to be sure.

obviously physcial metals act as insurance in a complete meltdown. While we can never underestimate how far psychology can run in either direction we must try to prepare ourselves.

HD