Rails' Reversal Could Hurt Transport Index

The four railroad stocks included in the Dow Jones Transportation Index are on shaky ground. All four members -- Norfolk Southern (NSC) , CSX (CSX) , Union Pacific (UNP) and Kansas City Southern (KSU) -- are lower this morning as they back away from important highs. Norfolk Southern is particularly suspect as it begins to put some distance on Tuesday's close at all-time highs. The transport index may be sending a clear warning sign.

For its part, NSC has had the biggest post-election rally. During this major run, the stock moved past its previous all-time high set back in 2014 at $117.65. Late in this rally, NSC received a nice post-earnings further upside following the Jan. 25 report that was very limited. The stock had become extremely stretched with its highest weekly MACD (moving average convergence/divergence) overbought reading ever. NSC did manage to put in a higher monthly high in February, its eighth straight, but momentum was clearly easing. After this week's new-high print, the stock is in danger of tracing out an ugly weekly downside reversal, which, considering the overbought reading, should be respected....120 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.

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