CSX Corp. (CSX) is the 'Stock of the Day' at Real Money on Wednesday. The share price is down sharply in reaction to their Q2 earnings miss and lower outlook as freight volumes slow their numbers. Jim Cramer commented about the stock in last night's Mad Money program.
Let's check out the charts and indicators.
In this daily bar chart of CSX, below, we can see that prices were steady to firm in the days and weeks ahead of their Q2 numbers. Prices crossed above and below the cresting 50-day moving average line but well above the rising 200-day line.
Digging below the price action we can see that trading volume has been declining from January and more surprising is that the On-Balance-Volume (OBV) line shows a decline from late August. It looks like someone has been selling CSX the past year both on weakness and on price strength.
The trend-following Moving Average Convergence Divergence (MACD) oscillator has been hugging the zero line the past six weeks suggesting there has not been any strength to the price trend.
In this weekly bar chart of CSX, below, we can see that prices nearly tripled over the past three years. (Can you hear the Good and Plenty box?) Prices are above the rising 40-week moving average line which has been doing a good job at defining the uptrend.
The weekly OBV line has been neutral the past year and thus has not confirmed the rising price action.
The MACD oscillator is pointed lower from above the zero line which is a take profits sell signal.
In this Point and Figure chart of CSX, below, we can see the price action before the earnings' reaction. The software shows an upside price target but that should change quickly after the opening today. A trade at $75.21 could precipitate further weakness.
Bottom line strategy: The chronic weakness in the OBV line suggests to me that CSX will see selling at least for today and probably the near future. A close below the 200-day moving average will weaken the chart. Play defense.