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The Predictive Powers Of A WSJ Fedex Article

Todays Date: December 15, 2018

In the role of a technical analyst, at times you see things that you question why have more stock traders not seen or considered this?

For instance, Fed Ex.

Fed Ex is a impressive future price forecaster for the S&P 500 and in fact the entire U.S. economy.

On October of 2007, Fed Ex plummeted and went beneath the S&P 500. This move down led the S&P 500 by 2 months. In other words, Fed Ex predicted the plunge in the S&P 500 by 8 weeks.

In this episode, I examine 8 years worth of data on both Fed Ex and the S&P 500 to show you the relationship between both of these stock charts.

The stock charts demonstrate that when Fed Ex is above the S&P 500 and leading higher, it gives a very bullish signal not only for the S&P 500 but the entire U.S. economy. While the S&P 500 is above Fed Ex and Fed Ex is leading lower, this gives a very negative signal for the economy.

Looking at June of 2009, Fed Ex started leading the S&P 500 higher. What is certainly interesting is that when Fed Ex leads the S&P 500 by an adequate amount to make a good gap, it is even more bullish for the stock market. Hence you can calculate the gap between Fed Ex and the S&P 500 to measure bullish outlook of investors as well as current 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 dropped 2 weeks later.

Looking at June of 2010, once more, Fed Ex began to gap away from the S&P 500 and that big gap still is present right now. This big gap forecasts an upward future price move for the S&P 500 in short order.

On July 26 2010 Fed Ex raised its earnings outlook for the fiscal first quarter and remainder of the year, with the delivery leviathan saying express and ground volumes have been greater than projected.

The reason behind why Fed Ex is a terrific future price predictor of the S&P 500 and really the entire U.S. economy should be obvious. When commerce and trade improves, shipments explode. To you Dow Transports theorists, Fed Ex is what trains were to the U.S. economy lots of years ago. Clearly we do not use trains like we use to anymore but rather shipping businesses like Fed Ex.

A good example of how Fed Ex is involved in everything can even be applied to a diverse sector such as property management. When banks begin to release credit and apartment complexes start to sell, property management services are essential. Mortgage payments need to be made as soon as sufficient rents are collected. The mortgage payments are then paid by checks via overnight Fed Ex. This is just one case of how interrelated our economy is and how no matter how diverse a business is, it is tied to Fed Ex in someway.

Live Wall Street news 24 hours a day with links to articles from the top newspapers and websites around the world. Go to wsj fedex.

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