FedEx Rallies: Does ‘Good Action’ Mean A Move Higher? - FedEx (NYSE:FDX)

FedEx Corporation FDX is trading higher on Monday after the stock fell by almost 6.5% on Friday.

The delivery service company posted earnings and an outlook that disappointed The Street. But the numbers may not be as bad as they were initially thought to be. On Friday, FedEx opened near the lows of the day. But by the close, the stock had reversed and rallied by more than 4.5%. This is why it is our Stock of the Day.

Traders often refer to a stock's ‘action.’ This is an intangible characteristic of a stock that can't be quantified.

For example, if a company reports earnings that exceed estimates and the stock moves lower, it would be a case of bad action. It shows that despite the strong numbers, there are still more investors and traders who wish to sell than there are who wish to buy.

If a company reports earnings that are worse than estimates and the stock rallies, it is an example of good action. This shows that despite the disappointing earnings report, more traders and investors wish to buy than those who wish to sell.

The price action in FedEx on Friday can be considered good. The stock opened near the lows of the day. But by the close, it had recovered a good part of its losses. This shows that many investors and traders came to think that the numbers were not as bad as they initially appeared to be.

If the move higher gets close to the $242 level, there is a good chance the stock encounters resistance. This could pause or end the move.

This level was support in June 2024. It was also support earlier this month.

People who bought shares for around $242 now regret doing so because they are looking at a loss. Some remorseful buyers will place sell orders if the price returns to their buying prices.

If there is a large enough number of these orders, it will create resistance at the same price that had been support. This is where the move higher in FedEx may end.