United Parcel Service (UPS) was covered for RealMoney very recently, and we said, "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."
UPS is almost about to retest its December high at $120.44 this morning. If other members of the Dow Jones Transportation Average (DJTA) are any judge, UPS could make a new high today. Let's check the latest charts and see if our strategy (above) needs any changing.
In this daily bar chart of UPS, below, we can see the prices are up at the top of the chart poised to make new highs. Prices are above the rising 50-day moving average line and the slower-to-react 200-day average line has only a slight positive slope. There was a bullish golden cross of the 50-day average crossing above the 200-day line in early August. The On-Balance-Volume (OBV) rises when the volume of trading is heavier on days when the stock closes higher -- the OBV has been rising for UPS and signals more aggressive buying. In the lower panel of this chart is the 12-day momentum study which shows that momentum has slowed from August to September even as prices have made new highs. A slower momentum picture is a bearish divergence but divergences are not precise timing tools.
In this weekly bar chart of UPS, below, we can see how prices are about to retest and perhaps break the December 2016 highs. The 40-week moving average line is flat. The weekly OBV line has moved up the past five months which is good but it has yet to make its own new high -- maybe that will happen this week. The weekly Moving Average Convergence Divergence (MACD) oscillator is in a bullish mode above the zero line.
In this Point and Figure chart, below, we already have a breakout with the trade at $118.86. An upside price target of $133.20 is projected.
Bottom line -- hold existing longs. Aggressive traders looking to add to longs could do so on this strength risking below $115 now, up from below $113.