Why A WSJ Fedex Article Links To The Whole US Economy
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In the role of a technical analyst, now and then you see things that you marvel why have more people not seen or thought of this?
For instance, Fed Ex.
Fed Ex is a impressive future price forecaster for the S&P 500 and in truth the whole U.S. economy.
On October of 2007, Fed Ex dropped and went beneath the S&P 500. That move down led the S&P 500 by 2 months. In other terms, Fed Ex predicted the nose-dive in the S&P 500 by 9 weeks.
In this video, I examine 8 years worth of chart data on both Fed Ex and the S&P 500 to explain to you the correlation between these two stock charts.
The stock charts illustrate that when Fed Ex is above the S&P 500 and leading higher, it provides a very bullish signal not only for the S&P 500 but the entire U.S. economy. Whilst the S&P 500 is above Fed Ex and Fed Ex is leading lower, this provides a very negative signal for stocks.
In June of 2009, Fed Ex began leading the S&P 500 higher. What is certainly interesting is that when Fed Ex leads the S&P 500 by a sufficient amount to make a good gap, it is still more bullish for the economy. Therefore you can quantify the gap between Fed Ex and the S&P 500 to calculate bullish sentiment of institutional investors as well as existing health of the U.S. economy.
The gap between Fed Ex and the S&P 500 lessened at the first part of April 2010 before the Euro crisis hit mainstream news and the S&P 500 fell 4 weeks later.
Looking at June of 2010, yet again, Fed Ex started to gap away from the S&P 500 and that large gap still is there today. This big gap forecasts an upward future price move for the S&P 500 soon.
On July 26 2010 Fed Ex upped its earnings outlook for the fiscal first quarter and remainder of the year, with the delivery monster telling us express and ground volumes have been higher than anticipated.
The logic for why Fed Ex is a impressive future price prophet of the S&P 500 and in reality the entire U.S. economy should be obvious. When business and trade improves, shipments explode. To you Dow Transports theorists, Fed Ex is what trains were to the U.S. economy a lot of years ago. Clearly we do not use trains like we use to any longer but instead transport businesses like Fed Ex.
A great example of how Fed Ex is caught up in most things can even be applied to a diverse sector such as property management. As banks begin to release credit and apartment buildings begin to sell, property management services are vital. Mortgage payments need to be made when sufficient rents are collected. The mortgage payments are then paid by checks via overnight Fed Ex. This is simply one example of how interconnected our economy is and how no matter how diverse a business is, it is linked to Fed Ex in someway.
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