The last time we highlighted United Parcel Service (UPS) in our Daily Stock Report was two months ago on January 29, 2025. Back then, the shares were exhibiting a steady downtrend since its peak in early 2022. The shares were deeply entrenched in the unfavored red zone of many of the reports it was found in on the SIA Platform, including the SIA S&P 500 Index. The SIA Platform issued a Yellow Neutral Zone with a Red SMAX signal back on September 16, 2022, at a price of $176.71. At the time of our last commentary on January 29, 2025, the shares were at $135.42 which represented an approximately 24% drop in price since the yellow neutral zone signal. Since then, the shares have continued to weaken further as the closing price is now at $109.95, which represents an additional 19% drop since the January 29, 2025, closing price. Overall, UPS has experienced a total decline in price of approximately 40% since September of 2022.
This review exemplifies the value of staying away from investments in the red unfavored zone. Many advisors may instinctively look for names in the unfavored zone with the mentality that the shares are oversold and a “value buy” is in play. However, “value buys” may in fact be “value traps” and the shares may continue to fall further in price, which is in fact what has occurred here. This reinforces SIA’s methodology to not to pursue a “contrarian” mindset as names in the unfavored zone are not exhibiting any relative strength as the sellers are in control and not many market participants are looking at the name.
In looking at the candlestick chart we see a steady pattern of lower highs and lower lows. The long red candlestick in late January is indicative of the disappointing Q4 earnings release. What is most interesting is the SIA relative strength readings were already hinting at negative news for several months even before the earnings announcement as the SIA Platform had indicated deteriorating money flows well before January. Currently, the shares are retesting the recent low at the $110.00 area. This will be an important level to watch to see if the shares can find support here. Resistance may be found at the short but brief rally at $121.00 earlier this month.
Let’s dive in and see what the Point and Figure Chart looks like today. In our last commentary back in January we identified the shares were trading below the point and figure negative trendline (red line) with a consistent pattern of lower highs and lower lows. We also identified support levels at $125.00 and $120.88 which has failed to hold. As such in looking at the chart today, the downward trend in still intact as a new lower low has transpired back last month. The shares have now formed a new column of O’s retracing back to that low last month. Currently the shares are exhibiting a bearish spread double bottom pattern. Next support is quickly approaching at $109.49 and below that, the $97.22 to $93.45 area with the $100 psychological level potentially halting further declines. To the upside, resistance is at its 3 box reversal of $120.88 and above that, $136.14. With a SMAX score of 4 out of 10, UPS is not exhibiting much near term strength against the asset classes.
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