Brown was our favorite color back on June 20 when we reviewed the charts of United Parcel Service Inc. (UPS) . We concluded at that time: "While the daily bar chart seems bullish the weekly chart is not quite there. Strategy-wise I would like to see UPS correct back to $108 to see if buyers step in and buy the dip. If a pullback holds I could then see buying strength and risking a close below $106."
Looking back at the price action since June 20 (chart below), we can see that UPS did pull back to $108 by the end of July and has climbed about $10 from that low. Our suggested sell stop below $106 was not challenged.
We can see a bullish golden cross of the 50-day average moving above the 200-day average line in early August. With prices of UPS within striking distance of its December zenith, we can see that both the 50- and 200-day averages have positive slopes. The On-Balance-Volume (OBV) line has been rising since early February and confirms the rally from May with its own uptrend. Momentum (lower panel) has slowed from August to September and should be monitored.
In this weekly bar chart of UPS, below, we can see see that prices are above the flat 40-week moving average line. Prices are also sitting just below its December zenith around $120. The weekly OBV line is also just below its respective peak and the weekly MACD oscillator is in a bullish mode, as it has been the past two months.
In this Point and Figure chart of UPS, below, we can see that prices need to reach $118.86 to make a breakout. A price target of $133 is projected.
Bottom line: Because momentum has slowed on the daily chart we might not break out to new highs on UPS in the immediate future, but the overall chart and indicator picture are friendly. I would approach the long side of UPS, risking below $113, looking for $125 and then $133.