For his "Executive Decision" segment during Wednesday night's Mad Money program, Jim Cramer sat down with Jim Foote, president and CEO of CSX Corp. (CSX) , the railroad that serves the regions where two-thirds of all Americans live.
Foote said that CSX has been working on its transformation for the past two years, focusing on making its operations as efficient and reliable as possible. He said the railroad industry had built in a lot of inefficiencies over the years, but now the company is focused on removing unnecessary work and transfers and simply moving the cargo as quickly as possible. This has not only allowed for higher volumes, it's also allowed CSX to pivot with the economy.
Foote added that in the past, coal was a large part of their operations, but now they've diversified into many categories of merchandise -- including chemicals, plastics, metal, lumber and yes, even e-commerce. He added that as railroads become more precise, more companies are willing to use them, which means volumes are on the rise.
Let's check out the charts of this railroad again this Thursday. We looked at CSX last week and concluded that "Traders could go long CSX at current levels if they can risk below $65. Add to longs above $72 and $73. Look for a rally to the low $80s by year-end."
In this updated daily bar chart of CSX, below, we can see that prices just closed a "hair" above the rising 200-day moving average line and is still above the nicely rising 50-day average line. The trading volume has increased with the rise in prices and that is a good sign for technical analysts. The On-Balance-Volume (OBV) has been steady, but a rising trend would be preferred. The Moving Average Convergence Divergence (MACD) oscillator has moved above the zero line for an outright go-long signal.
In this weekly bar chart of CSX, below, we can see a week's worth of improvement. Prices are ready to close above the rising 40-week moving average line. That could happen today or tomorrow. The weekly OBV line is bottoming and the MACD oscillator is ready to cross to the upside for a cover-shorts buy signal.
In this Point and Figure chart of CSX, below, we can see an upside price target of $83.47 and we can also note that a trade at $73.00 will refresh the uptrend with its upside breakout.
Bottom line strategy: Our long recommendation of last week is playing out nicely. Continue to hold longs and add on strength if you do not yet have your full position.