The Big 3: FDX, HD, QCOM

Marlee Caden (0:03)

Welcome back to Trading 360 I'm Marlee Caden. It's time for the big three. We've got three stocks, three charts, and three trades for you. Rick Ducat will take us through the charts. Here to take us through the trades today, Don Kaufman, co-founder of TheoTrade. Great to have you back on, Don. Love to kick things off the same way we always do, big picture thought on the market.

Don Kaufman (0:19)

Yeah, you know, there's still a lot of bifurcations in this marketplace. It's, you know, three or four tech stocks, followed by, well, the rest of the marketplace. You know, and really what it comes down to is when you look at underlyings like Meta. Now, I'm an options geek, and I want to explain something a little bit deep over here for a second. Look at the options chain inside of Meta. If you want to see chaos, just go a week, maybe two weeks out. There is a $2 trillion company that is seeing an inverted implied volatility skew. What that actually means is that the chances of the marketplace, if you will, crashing to the upside is priced in, okay, for Meta higher to the upside than it is to the downside, and that in effect is just wild. Again, a $2 trillion company with an inverted implied volatility skew, to that extent, is not something you're going to see in everyday markets.

Marlee Caden (1:10)

Certainly not, but something to be excited about. We love that stuff over here, so thanks for highlighting that for everybody watching. I want to dive into your big three though. You've got FedEx as your first pick here in the big three. They're a little under pressure today, kind of down with the broader market right now, only about six-tenths of a percent. How are you looking at FedEx today?

Don Kaufman (1:28)

FedEx is going to be, this is gonna be my bearish trade for the day. I promise there's only gonna be one bearish trade today, but look, I'm gonna hop on the bandwagon of what is the current trend, and that is the trend of the downside. As you're gonna see in moments here, as Rick is gonna take you through, it appears to me like a double pop has actually formed. Anywhere right around that 340, 345-ish level, hit it twice, has reversed hard from that 340 level down to present value. And I have to tell you, it does not look like it's going to stop anytime soon. The technicals are in a horrific stance right now. As I said, I'm gonna get bearish in here, but I'm gonna give myself a little bit of duration.

This trade, look, we're gonna have to pass through earnings. Maybe it gets a little bit of a bid back under it. But again, I want to hop on trend right now, and that trend is absolutely to the downside. Let's go to the Deist 18 expiration. Again, give myself a little time. Deist 18 expiration.

I'm gonna buy the 280 puts. I'm gonna sell the 270 puts against it. This one is done for a $3 debit, so a full $10 wide put spread. Being done for a $3 debit gives us all kind of time. There's huge upside to this if FedEx continues to trade to the downside.

Marlee Caden (2:42)

All right, Rick, so he says the technicals are in a horrific stance. Are you seeing the same thing and take us through what's horrifying?

Rick Ducat (2:50)

Well, it's not great. I mean, and to kind of illustrate some of these things, these would be the double top areas that Don was discussing here near about 340, 341 or so. So you can see kind of it makes this M-shaped pattern here where we hit the same point and see rejections two separate times. Now we formed a downward sloping channel type shape here between our two white lines. We have crossed through a floor that was formed after earnings here near 306 After a brief bounce, we collapsed through that pretty swiftly here. So now we have a couple of important areas to the downside to consider. We have a set of relative lows here at 290 and here at 286 So that gives us this supportive zone here potentially. But we also have a gap that formed back here. So 276 to about 271 You can see that was some low points there. And if you recall that, that roughly lines up with the break even and the short strike of our trade. So it would be looking for a move down to this supportive area here. Where we formed this gap almost back toward the beginning of the year in January or so. So now we can see our moving averages in this case are showing signs of trend acceleration to the downside. You can see that we have our five day, 21 day and 63 day exponential moving averages in descending order according to their speed here. So the fastest is below the slowest one. We also have our 251 day EMA representing one trading year coming in at 284.41. So that remains another notable downside area to watch. It also lines up pretty closely with the lower boundary of our channel. So that gives it even a little bit more extra emphasis as an area to watch out for. RSI is hanging on just by its fingernails here above the 30 threshold here that would represent the oversold area, a move below that area would be another more bearish signal here.