2 Transport Stocks Signaling a Bounce

CSX seems overdue for bullish brokerage notes

by Karee Venema

Published on Apr 10, 2019 at 12:53 PM

The shares of Florida-based freight concern CSX Corporation (NASDAQ:CSX) have flexed some technical muscle since bouncing from $59 in late December -- a level that coincides with a bull gap from last April -- and has since added 28%, to trade at $74.83. And while CSX stock pulled back after its April 2 all-time peak of $77.15, a historically bullish signal suggests new highs could be on the horizon.

Specifically, CSX shares are trading within one standard deviation of their 40-day moving average after a lengthy stretch above it, defined for this study as 60% of the time in the last two months and 80% of the time in the past 10 trading days. There have been 12 other times this signal has sounded in the past three years, resulting in an average one-month gain of 4.47% for CSX.

csx corp price chart april 18

A round of bullish brokerage notes could fuel tailwinds for CSX shares While nine of 19 analysts still maintain a "hold" or "sell" rating on a stock that's up 20% year-to-date, the average 12-month price target of $77.57 is a slim 3.9%  premium to current trading levels. This leaves the door open for upgrades and/or price-target hikes -- possibly in the wake of the company's first-quarter earnings report, due next Tuesday, April 16 -- which could draw more buyers to the table.

Knight-Swift Transportation Holdings Inc (NYSE:KNX) is another stock in the transports sector that's flashing a bullish technical signal. The shares of the Arizona-based trucking company rallied from a late-December low of $23.27 to a two-month high of $35.30 on Feb. 20. The security has drifted lower from here, last seen at $33.01, but is now testing support at its 160-day moving average.

According to White, there have been seven previous occurrences in the last three years where KNX has come within one standard deviation of this trendline after trading above it for a notable period. These prior signals translated into an average one-month positive return of 4.37% for the stock.

knx stock daily price chart april 10

A round of short covering could create a boon for KNX stock, too. Short interest surged 21.7% in the most recent reporting period to 28.88 million shares. This accounts for a roughly 23% of the equity's available float, or 14 times Knight--Swift Transportation's average daily pace of trading.

a schaeffer's exclusive


Heat up your summer trading with this FREE insider report!



NEW! Explore Schaeffer’s Partners' deals and get connected to top online brokerages with deals tailored exclusively for our readers.  Get answers to your questions regarding transfer fees, commission rates, programs and available discounts related to online trading services.

MORE | MARKETstories

The Next Step Towards a Cashless Economy
Click to continue to advertiser's site.
Research Firm: "Buyer Beware" of This Biotech
S&W Seed stock hasn't seen a surge of this magnitude since 2017
Retail Earnings, Consumer Spending Data to Steer Post-Holiday Trade
Consumer spending data hits Wall Street on the final trading day of May
The Next Step Towards a Cashless Economy
Click to continue to advertiser's site.