United Parcel Service () - stocks on Tuesday are down by about 3%. That's after the package delivery company reported earnings before the open.
While the stock is off its session low, it was down roughly 4.7 percent it's not the reaction that the bulls were hoping for. That's for two reasons.
First, UPS's stock was released in February, when it reported earnings, which increased by more than 14% in one session.
Second, the stock was down about 20% from the highs reported in this earnings report. The bulls were hoping that the decline would eliminate the downside risk and, if anything, establish the foundation for an upside pop.
While investors are in a risk-off mindset, it's clear that investors are coping with.
The company exceeds expectations, with profit increasing by about 10% year over year. UPS has also stated that it intends to double its share buyback to $2 billion, and it has stated that its full-year projection has been confirmed.
Wall Street isn't buying the news. Where can't you come from here?
TheStreet Recommands that Everyone Become Home
UPS Stock is being traded.
UPS stock a week.
TrendSpider.com has provided a chart.
There is a major argument for, but I believe it comes with the caveat that the shares must hold strong support. In my opinion, it's $175 to $178.
This area has been a critical area in the past 16 months, indicating resistance in the fourth quarter of 2020, the breakout area in the second quarter of 2021, and support later in the fourth quarter.
When we measure from the all-time high to the 2020 low, it is also where the 38.2% retracement comes into play.
If UPS is not able to hold this area, then the stock isn't one that I am all that interested in from a technical perspective. Purchasing a dip into this zone might be a low-risk strategy to UPS, but that's assuming we test this zone, which is not a guarantee.
Keep an eye on the 21-month moving average on the upside. This measure has been resistant recently.
The stock is recovering for its sixth weekly decline. At some point, one might think it is becoming oversold especially after a good earnings report. Right now, the market is in a difficult position.
If UPS stock can clear the 21-month moving average, look for a correction of the declining 10-week moving average. Above that, the key 50-week moving average is at least $200.