The Transportation Index is trading at new 2016 highs on Monday, with help from FedEx.
Shares of transport giant FedEx (FDX) are in full breakout mode on Monday. The stock is up over 3% as it extends the rally off last week's low. FedEx is working on a four-day winning streak and is breaking above a significant overhead trendline.
FedEx bulls should be very encouraged by this powerful breakout move.
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Back on Sept. 21, FedEx exploded to the upside following its first-quarter earningsreport. The stock opened that session with a huge breakout gap as volume surged. FedEx finished with a 6.9% gain, taking out heavy resistance near the early 2016 highs. The stock drifted higher over the next week before running out of momentum just above $177. By the end of the month, it was clear FedEx would need a healthy consolidation before the rally could resume. During his seven-week process, the stock held key support near the old highs.
As Monday's breakout move gains steam, the $169 area could prove to be a major support zone.
In the near term, FedEx investors should consider the stock a buy on weakness. The stock has left behind a fresh support zone between the September and October highs. This important zone runs between $177.50 and $176.35. A drift back down to this area would offer a very low risk entry for patient bulls.
On the upside, FedEx is headed for a retest of its all-time high of $185.20 set back in June of last year. A pullback from the this heavy supply zone is very likely.
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