subject: How A Wsj Fedex Article Links To The Whole S&p 500 [print this page] In the role of a stock analyst, every now and then you see things that you wonder why have more stock traders not seen or thought of this?
For instance, Fed Ex.
Fed Ex is a excellent future price prophet for the S&P 500 and in truth the whole U.S. economy.
In October of 2007, Fed Ex fell and broke below the S&P 500. This move down led the S&P 500 by 2 months. In other terms, Fed Ex predicted the fall in the S&P 500 by 9 weeks.
In this video, I study 8 years worth of data on both Fed Ex and the S&P 500 to show you the inter-market relationship involving both of these stock charts.
The stock charts explain that when Fed Ex is above the S&P 500 and leading higher, it offers a very bullish signal not only for the S&P 500 but the whole U.S. economy. Whilst the S&P 500 is above Fed Ex and Fed Ex is leading lower, this provides a extremely negative signal for the economy.
Studying June of 2009, Fed Ex began leading the S&P 500 higher. Something that is certainly interesting is that when Fed Ex leads the S&P 500 by an adequate amount to generate a good gap, it is still more bullish for the stock market. Thus you can calculate the gap between Fed Ex and the S&P 500 to determine bullish outlook of investors in addition to present health of the U.S. economy.
The gap between Fed Ex and the S&P 500 narrowed at the first part of April 2010 before the Euro crisis hit mainstream news and the S&P 500 fell 2 weeks later.
Looking at June of 2010, all over again, Fed Ex began to gap away from the S&P 500 and that large gap still is present today. This wide gap forecasts an upward future price move for the S&P 500 soon.
On July 26 2010 Fed Ex boosted its earnings outlook for the fiscal first quarter and rest of the year, with the shipping Goliath telling us express and ground volumes have been higher than estimated.
The reason Fed Ex is a excellent future price forecaster of the S&P 500 and in truth the entire U.S. economy should be apparent. When business and trade improves, shipments go up. To you Dow Transports theorists, Fed Ex is what trains were to the U.S. economy a lot of years ago. Obviously we do not use trains like we use to any longer but as an alternative transport businesses like Fed Ex.
A great example of how Fed Ex is implicated in most things can even be applied to a diverse sector such as property management. When banks begin to relax credit and apartment complexes begin to sell, property management services are required. 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 only one example of how interrelated our economy is and how no matter how diverse a business is, it is linked to Fed Ex somehow.
