I Know I Can, I Know I Can:
The old children’s book story is inspirational, even when dealing with a 3 year old that I am currently experiencing. The rails which are the main subject of the lullaby, are showing courage and some are lacking confidence. The ratio chart below of UNP against CSX is a bit eye opening, even for youngsters. CSX was all the rage on 7/17 when it last reported earnings and slumped more than 10%. UNP dropped in sympathy that session losing 6%, but blasted back higher the next day after it delivered a stellar quarter. If one made their conclusion on an isolated name that the group was in jeopardy, it was wrong. CNI and CP are trading right near 52 week highs, and the IYT has set up a 195.75 cup with handle pivot. Examine the whole, before trying to validate a negative narrative if you are a bear.
Sensationalizing headlines are mostly misleading. Case in point FDX. The stock often seen as a bellwether of the health of the global economy, may be missing something. The stock is still mired in a slump now 35% off most recent 52 week highs, while chief rival UPS resides just 5% off its own most recent peak. Could it be that FedEx is simply not delivering the goods, pun intended, that investors would like to see? UPS last week recorded a huge 16.7% gain last week (had not registered a double digit weekly gain in the last 5 years). If one focused on how well UPS is doing, perhaps many would have a bit of a rosier outlook on how well international business is doing.
As I was drinking a pint of Guinness last night, a DEO product, the thought good things come to those who wait came over me. That thought can be applied to investing as well. Below is the chart of ZTO and how it was presented in our 7/15 Industrial Note. Eleven sessions now the stock has touched the very round 20 number since finishing above it on 3/21, with ZERO CLOSES above (several others have come within pennies too). The double bottom can now be interpreted as a bull flag formation, and a break above the recommended pivot would carry a measured move to 23. All aboard the Orient Express?