CSX Corp. (CSX) has rallied a little bit from its January lows, but weak buying and a bearish divergence from our momentum study point to a return to the lows, in my opinion.
Looking at this daily chart of CSX, above, we can see prices are still below the declining 200-day simple moving average line. The On-Balance-Volume (OBV) line made a weak and uneven recovery from a January low, suggesting recent buyers of CSX are not being aggressive about building up long positions. Prices rallied to make a high in February, corrected slightly and then rallied to make a higher high in March. The momentum study in the lower panel went up with the price action, but made a lower high on the next rally in March. This difference in the indicator's performance vs. the stock's performance is called a bearish divergence -- price is doing one thing and the indicator is doing something else. There was less power or momentum behind the second advance. An advance with weakening momentum is typically on borrowed time. Last, prices of CSX are struggling in the lower half of a $26-$30 resistance zone from August until November. Unless a strong up move gets started soon, CSX looks poised to decline.
This longer-term look at CSX, above, is also bearish. The rally from the January lows ran into both overhead resistance on the chart and the declining 40-week moving average line. A retest of the January lows seems to be on the schedule for CSX.