We last reviewed XPO Logistics Inc. (XPO) back in early December, and I recommended, "With momentum slowing and diverging on a daily and weekly scale, XPO longs should consider nailing down or booking some profits. The balance of the position can be held risking a close below $70. Our price target of $83 could still be seen but a pullback could allow us to rebuy a full position at a more attractive level."
Looking back over the past four months of price activity I can see that I underestimated the strength of this security. Prices exploded on the upside in late December blowing right past our $83 price target. XPO has continued higher with a correction in February and what could be a broadening pattern since late February. What do the charts and indicators suggest today for XPO?
In this updated daily bar chart of XPO, below, we can see that prices are above the rising 50-day simple moving average line. Prices are above the rising 200-day line, maybe too far above it. Prices have been swinging up and down with higher highs and lower lows since late February. This pattern might be considered an expanding or broadening pattern. This pattern can be a continuation pattern leading to higher prices or it can be a reversal pattern signaling a decline.
The daily On-Balance-Volume (OBV) line has been rising since August and has been firm the past two months, which could be signaling higher prices ahead. The trend-following Moving Average Convergence Divergence (MACD) oscillator has turned up this month to a fresh outright go long signal.
In this weekly bar chart of XPO, below, we can see that prices are above the rising 40-week moving average line. This indicator is a lagging indicator but notice how effective it has been the past two years. The weekly OBV line has been rising since June of 2016 and recently made a new high to confirm the price gains. In the lower panel is the Moving Average Convergence Divergence (MACD) oscillator and it is narrowing toward a possible bullish crossover.
In this Point and Figure chart of XPO, below, we can see that prices just made a new high for the move up and there is a possible longer-term price target of $145.69 being projected.
Bottom line: A bar chart of XPO suggests we are seeing either a continuation pattern or a reversal pattern. The Point and Figure chart is pointing to higher prices. The moving averages are pointing up so I would trade in that direction. Buyers of XPO should risk below $104 looking for gains to the $125-$145 area.
