Kansas City Southern (KSU) is a member of the Dow Jones Transportation Average, but being a member of half of the famous Dow Theory does not guarantee a strong chart. Let's look closer.
In this daily bar chart of KSU, below, going back twelve months, we can see that prices have been in a downward slope since early September. Prices have held the $80 area twice -- in November and again earlier this month. KSU has managed to rally above the now-flat, 50-day moving average line but remains below the flat-to-slightly-declining, 200-day moving average line.
The On-Balance-Volume (OBV) line has improved slightly this month, telling us that buyers of KSU did respond with more aggressive buying. A bullish divergence can be seen in November and January -- as prices made equal lows at $80 the momentum study made a higher low. Let's check the weekly chart before reaching a conclusion.
The technical clues in this three-year weekly chart of KSU, below, are mixed. Prices are below the cresting, 40-week moving average line. The weekly OBV line has been in a downtrend for the past two years and the improvement from the early 2016 low did not break out to a new high.
The trend-following Moving Average Convergence Divergence (MACD) oscillator (lower panel) is in bearish territory below the zero line. The two moving averages that make up the indicator have narrowed to a possible cover-shorts buy signal.
Bottom line: At this juncture it doesn't look like KSU has the technical strength to break above $90 and the 200-day moving average line. I would look for a slow drift back into the $85 to $80 area.
