We last reviewed shares of United Parcel Service on July 24, 2024, shortly after its historic drop, when the stock shed 12% of its value in one day following disappointing earnings. At that time, shares were deep in the Unfavored zone of the SIA S&P 100 Index Report, which did not impact rules-based SIA practitioners that avoid such positions. However, it served as a prime example of how SIAâs relative strength readings help elite advisors identify when negative news may already be hinted at even before announcements are widely disseminated, especially in efficient and liquid mega-cap stocks. Since then, not much has changed with UPS shares. They remain deeply unfavored within the SIA S&P 100 Index Report and continue to trade below the point-and-figure negative trend line. UPS shares are down 10.88% over the past year but have seen a slight rally in the last month with a gain of 7.38%.
In line with our analysis of the transportation sector, where airline stocks have taken the lead, SIA is not detecting the same pattern with rail stocks (see daily stock reports for Union Pacific, CN, and CP Railway). Additionally, SIAâs early outlook on the boating and shipping sectors is not promising from a technical perspective, with more detailed analysis on deck in the coming days. Today, however, we are revisiting UPS, not for the specifics of its earnings disappointment, but for its thematic implications regarding the health of the North American economy. Specifically, UPSâs underperformance may signal trouble beneath the surface, particularly in relation to the significant amount of import trade it handles with China.
Looking at the point-and-figure chart for UPS, we observe that shares remain under distribution, having formed multiple double and triple bottoms while breaking a long-term positive trend line. Shares have since consolidated and moved up to resistance at the now-negative trend line near current levels. Further resistance is seen at $146.53 and $155.49. On the downside, there is support at $125.06 and $120.20, but beyond that, UPS may have room to fall, with additional support at the Year 2000 level between $98.61 and $96.67. The whole number $100 may act as a psychological level, potentially halting further declines. This is against the backdrop of an SIA SMAX score of 3/10, where UPS is compared against other asset classes and presents an underperformance reading in 7 of its 10 vectors.
While traditional Dow Theory used transports alongside industrials to confirm bullish trends, we find it valuable to break the modern transportation index into sub-sectorsârails, ships, planes, intermodals, and newer stocks like Uber. Todayâs analysis focuses on breaking apart these sub-sectors and comparing UPS to the SIA Transportation Equal Weight Index (EWI524), where we see significant underperformance. While companies like United Airlines and Uber may be hiding challenges beneath the surface, sectors like rail and shippingârepresented by companies like UPS and FedExâmay be telling us a different story. Tomorrow, we will analyze shipping stocks, in light of a dismal Baltic Freight Index reading, which could signal troubled waters ahead.
Disclaimer: SIACharts Inc. specifically represents that it does not give investment advice or advocate the purchase or sale of any security or investment whatsoever. This information has been prepared without regard to any particular investors investment objectives, financial situation, and needs. None of the information contained in this document constitutes an offer to sell or the solicitation of an offer to buy any security or other investment or an offer to provide investment services of any kind. As such, advisors and their clients should not act on any recommendation (express or implied) or information in this report without obtaining specific advice in relation to their accounts and should not rely on information herein as the primary basis for their investment decisions. Information contained herein is based on data obtained from recognized statistical services, issuer reports or communications, or other sources, believed to be reliable. SIACharts Inc. nor its third party content providers make any representations or warranties or take any responsibility as to the accuracy or completeness of any recommendation or information contained herein and shall not be liable for any errors, inaccuracies or delays in content, or for any actions taken in reliance thereon. Any statements nonfactual in nature constitute only current opinions, which are subject to change without notice.
