SIA Charts' Relative Strength rankings not only help investors identify outperforming and underperforming stocks within a universe relative to their peers, but also signal changes in performance trends. The SIA Daily Stock Report has long served as a valuable resource for demonstrating the effectiveness of our relative strength tools. These tools not only pinpoint promising opportunities but, more importantly, help investors avoid pitfallsâconsidering the opportunity cost of each investment compared not just against the market, but also against stocks within the same sector or sub-index. Today's focus is on UPS, illustrating a crucial lesson. UPS starkly contrasts with its cousin FedEx, even within their sector on the SIA S&P 100 Index Report, showing significant underperformance. Analyzing the UPS relative strength chart reveals a downward trend from 2021 to 2023, moving from the Favored Green Zone to the bottom of the list. Following several warnings, earnings reports finally confirmed EPS at $1.79 versus the previous $2.54 and a consensus estimate of $1.99, leading to a sharp 12.1% dropâthe largest single-day decline since its IPO in 1999. Our methodology avoids stocks in the Unfavored Red Zone, enforcing robust risk management to protect capital. As the Oracle of Omaha's first rule of investing suggests, 'Don't lose money.' Assessing the damage, we turn to the point-and-figure chart of UPS. Underperformance is evident since its peak in early 2022 at $210 per share. Since then, shares have been in distribution, forming multiple double and triple bottoms, and breaking its very long-term positive trend line. Amid a price discovery triangle (black lines), backdropped with weak relative strength and an overhead negative RED trend line, the outcome of this battle is clear. Resistance on UPS is now at $136.78 (3-box & long-term) with additional resistance along negative trend at $150.22 (whole number).
Support is sadly well below current levels at a range of $101.09 and $107.28 but lets just call it $100 (whole number).
With a bearish SMAX score of 2, UPS is exhibiting overall weakness against all the asset classes.
Whether you're currently holding the stock or observing from a distance, this rollover serves as a textbook example of positions to avoid â unless you're shorting the UPS or engaging in pairs trading with the attached chart of FedEx (FDX).
FEDEX Corp. (FDX) was last reviewed on July 8, 2024, and remains a standout in the SIA S&P 100 Index Report, holding position #12 with strong relative strength. The recent chart breakout above the $300 level marks a significant development. Key support levels now stand at $277.44 and $261.44, while resistance levels noted on July 8th are at $338.20 and $351.86. With a bullish SMAX score of 10, FDX demonstrates robust strength across asset classes. In terms of performance, FDX has delivered impressive results, up 20.16% compared to -16.97% for UPS in 2024. This 37.13% differential underscores the opportunity cost of holding UPS versus FDX this year.
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