As discussed in previous reports, one of the most important stocks reflecting the overall strength of the U.S. economy is FedEx (FDX). I had previously expected a move above $140 by year-end in FDX, which I suggested would confirm the strength in the U.S. retail economy for the holiday shopping season.
As you can see in the following graph, FDX finally succeeded in breaking above the $140 level on Friday, closing at a new high of $142.71. As I wrote last week, “I expect a nominal move above $140 before the year is through, and assuming this happens it would most likely provide a buoy for Wall Street’s year-end enthusiasm. It also might just be enough of a catalyst to keep the market uptrend intact heading into 2014 and thereby keep our Q1 2014 ‘melt-up’ scenario intact.
The latest rally in FDX is clearly sending a green flag for the overall business economy with strong undertones for the strength among the retailers. [Excerpted from the 12/20/13 issue of Momentum Strategies Report]