The Road Starts to Look Shaky for CSX

 | Nov 08, 2017 | 9:26 AM EST
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The price chart of CSX Corp. (CSX) has been rolling over for at least the past five months. With all the media reports and Presidential tweets on how great the U.S. economy is doing, I ask the question: "Why isn't the price of the stock of CSX climbing?"

We know that the market is a discounting mechanism, so traders and investors in CSX must be looking ahead and not focused so much on today's news. Let's check the rolling stock, the charts and the indicators to see what might be going on.

In this daily bar chart of CSX, below, we can see that prices have crossed above and below the 50-day moving average line a number of times this year. This month, CSX has been testing the rising 200-day moving average line.

A close below $50 on CSX would probably convince most trend followers that the 200-day average line was broken. The On-Balance-Volume (OBV) line peaked in July and has roughly been on the defensive since.

A soft or weak OBV line tells us that sellers of CSX have been more aggressive. The trend-following Moving Average Convergence Divergence (MACD) peaked in late January and has spent most of the year below the zero line in a bearish mode.

In this weekly bar chart of CSX, below, we can see that prices are testing the rising 40-week moving average line. The weekly OBV line peaked in February and has not made a new high even when prices made new highs this past summer. The weekly MACD oscillator is in a bearish mode and pointed down towards the zero line.

In this Point and Figure chart, below, we can see a high in June/July (look for the "6" and the "7" on the chart) and a slightly lower high in October (look for the "A" on the chart). There is some chart support down to $48 and a $47.80 price target, but a break of $48.06 would be bearish.

Bottom line: if you are long CSX with a profit, I would look to protect those gains. A close below $50 is strike one. A close below $48 is strike two, and a close below $46 is strike three.

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