Union Pacific (UNP) has climbed higher the past year. Prices look to be on sound footing to move still higher in the months ahead.
The charts and indicators should convince you to stay on track with the bulls.
This 12-month daily chart of UNP, above, shows a pretty durable uptrend with rallies and corrections. Pullbacks in June and November held at the intersection of the rising 200-day moving average line. Prices are also above the rising 50-day moving average line. The daily On-Balance-Volume (OBV) line has been on a gentle rise with only shallow dips when UNP made its price corrections. There is a bearish divergence in November and January as prices made higher highs and the momentum indicator made lower highs. This bearish divergence tells us the pace of the rally has slowed but it does not call for selling the stock. A slowing uptrend is not the same as the end of an uptrend.
This three-year weekly chart of UNP, above, shows the strength of this stock. Prices made a relatively quick reversal in January 2016 and have moved up to retest old resistance from late 2014/early 2015. UNP is trading above the rising 40-week moving average line. The weekly OBV line has moved up with the price action and just made a new high along with the price action. The upward movement in the OBV line suggests investors have been aggressive in accumulating shares of UNP in the past year. This accumulation is a strong indicator that further price gains lie ahead. The weekly Moving Average Convergence Divergence (MACD) oscillator is in a bullish configuration above the zero line.
Strategy: UNP could retest nearby support beginning around $105, but I would anticipate that prices hold and try the upside again as we chug forward into 2017. It will take a close below $99 to weaken the chart picture.