UPS Gapped Lower on Earnings; Stocks Held Support at 100-day MA

United Parcel Services UPS net income rose 10% to $1.00 per share, missing analyst estimates of 1.02. The company's revenue rose 4% to $13.1 billion, which also missed estimates of $13.3 billion.  UPS said volume in long-haul airfreight routes between Asia and the U.S. were flat in the first quarter, continuing a pattern of weakness.

Price action on the stock was very weak on the open, with the stock price gapping lower, but holding support near the 100-day moving average at $76.50.  As the broader stock market rose, the transports moved off their lows, but were the weak link in a positive day.  A break of the $76 level on UPS would likely test the 200-day moving average near $74.

Resistance on the stock is now seen near the 50-day moving average, which is seen near $78.50.  The stock sliced through this level, which was former support.  The stock price failed to break through the recent highs near $81, which was tested 3 times during March and April.

Momentum on the stock price has been negative for most of April.  The MACD (moving average convergence divergence index), created a sell signal on the stock on April 1, when the spread (the 12-day moving average minus the 26-day moving average) crossed below the 9-day moving average of the spread.  The index is in negative territory, close to -.3, which is nearly the low point during the past 6 months.

The RSI (relative strength index), which measure over bought and oversold levels, pushed below 40, which is in the lower portion of the neutral range.  Volume on the stock price increased after earnings, which does not bode well given the negative momentum.