Playbook: UPS Stock Support is Piling Up

UPS has formed a cup-and-handle pattern on the charts

CMT, Senior Market Strategist
Feb 15, 2023 at 10:16 AM
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Below is an excerpt from this yesterday's episode of Schaeffer's Playbook of the Week, featuring Schaeffer's Senior Market Strategist Matthew Timpane. Below, Matthew makes a bullish case for logistics giant United Parcel Service, Inc. (NYSE:UPS).

"UPS, per the chart, is in a cup-and-handle formation right now. It broke out of that short-term downtrend, has now formed a cup, and pulled back into trend. It also put in an inside-weekly candle. The 21- and 200-day moving averages are just below and could be supportive. The stock's volume weighted average price (VWAP) is right near that trend level, too.

PLBK UPS

There's a lot of things going right for this stock, even with that recent oil pop. UPS typically takes a backseat when oil pops because energy costs are expected to rise. Given that outperformance during a testy period, UPS could be primed to rally back up toward $195. Despite this optimism, there's more skepticism from analysts, with 15 of the 31 brokerages maintaining "hold" or worse ratings on the equity.

Data at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) shows UPS with a 50-day call/put volume ratio of 1.16 that stands higher than 95% of annual readings.

Options are fairly cheap, with stock's Schaeffer's Volatility Index (SVI) of 23% stands in the 7th percentile of readings from the past year."

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