For his second "Executive Decision" segment of Mad Money Wednesday night, Jim Cramer spoke with Carol Tome, the new CEO of United Parcel Service (UPS) , the package delivery giant that saw its shares dip 8.8% Wednesday after the company declined to offer investors forward-looking guidance.
Tome explained that the world is changing and UPS needs to lean into a new experience for their customers. "Better, not bigger," is the company's mantra as they aim to serve their customers how they want to be served, with a new, digital experience.
Previously, UPS had developed all of its own technology in-house, rolling out new features just once a year. But Tome said that UPS is now on a continual update cycle, simplifying their business whenever they can.
Tome said UPS is preparing for the biggest surge of holiday business they've ever seen. The company has taken many steps, including hiring up to 100,000 seasonal employees to deliver that "peakiest of peaks" in demand.
UPS is also expanding into healthcare logistics with two new "freezer farms," refrigerated facilities that can manufacture their own dry ice to help safely drugs and pharmaceuticals get where they're needed.
Let's check out the charts and indicators of UPS.
In this daily Japanese candlestick chart of UPS, below, we can see that prices were weakening the past three months before yesterday's gap lower. Prices gapped below the cresting 50-day moving average line.
The daily On-Balance-Volume (OBV) line was weakening from August and tells us that sellers of UPS were quietly more aggressive.
The 12-day price momentum study (bottom panel) shows a lower high from August to October even though prices made higher highs over the same time period. This difference is a bearish divergence (prices do one thing and the indicator does not confirm it) and can foreshadow a reversal. A slowing momentum reading tells us that the price advance is slowing.
In this weekly Japanese candlestick chart of UPS, below, we can see an "evening doji star" top reversal pattern that preceded this week's sharp decline.
The weekly OBV line has turned lower telling us that sellers are now more aggressive than buyers.
The Moving Average Convergence Divergence (MACD) oscillator has narrowed significantly in recent weeks telling us that the strength of the uptrend has weakened.
In this daily Point and Figure chart of UPS, below, we can see a potential downside price target in the $133 area.
Bottom line strategy: UPS has started a correction of its rally from March. This could be a shallow pullback or it could be a deep correction. The charts and indicators can only tell us so much. Let's stand back and watch how this develops.
Get an email alert each time I write an article for Real Money. Click the "+Follow" next to my byline to this article.
