Why A WSJ Fedex Report Forecasts Our Economic Future
As a technical analyst, from time to time you see things that you wonder why have more traders not seen or considered this?
For example, Fed Ex.
Fed Ex is a excellent future price forecaster for the S&P 500 and in fact the entire U.S. economy.
In October of 2007, Fed Ex dropped and broke beneath the S&P 500. This move down led the S&P 500 by 2 months. In other terms, Fed Ex predicted the plunge in the S&P 500 by 9 weeks.
In this video, I examine 8 years worth of data on both Fed Ex and the S&P 500 to explain to you the association between both of these stock charts.
The stock charts show 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 whole U.S. economy. While 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 started leading the S&P 500 higher. Something that is certainly interesting is that when Fed Ex leads the S&P 500 by a sufficient amount to generate a good gap, it is even more bullish for the stock market. Hence you can measure the gap between Fed Ex and the S&P 500 to gauge bullish sentiment of investors as well as present 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 3 weeks later.
Looking at June of 2010, once again, Fed Ex began to gap away from the S&P 500 and that big 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 transport leviathan saying express and ground volumes have been higher than predicted.
The basis for why Fed Ex is a impressive future price prophet of the S&P 500 and in fact the entire U.S. economy should be apparent. As business and industry improves, shipments explode. For you Dow Transports theorists, Fed Ex is what trains were to the U.S. economy numerous years ago. Clearly we don't use trains like we use to anymore but as an alternative transport companies like Fed Ex.
A great example of how Fed Ex is mixed up in everything can even be applied to a diverse sector such as property management. When banks begin to loosen credit and apartment buildings begin to sell, property management services are required. Mortgage payments need to be made as soon as adequate rents are collected. The mortgage payments are then paid by checks via overnight Fed Ex. This is merely one example of how interrelated our economy is and how no matter how diverse a business is, it is linked to Fed Ex somehow.
Article Source: FxTradingStock.com
About the Author
Live Wall Street news 7 days a week, 24 hours a day with links to articles from the top newspapers and websites around the world. Go to wsj fedex
by: Mike Smith.
Total views: 29
Word Count: 527
Date: Sun, 1 Aug 2010
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