What sector is close to breaking out? Railroads! Check out $DJUSRR $CSX $UNP $TRN $WAB
Discussed in this article: CSX Corp. ( $CSX )
I want to look at the railroads, actually just one railroad stock. But I want to start with the Dow Jones US Railroads Index. This is one sector that isn’t overbought, it’s just kind of been grinding sideways for quite a while and it looks poised for a breakout.
If we look at some of the individual stocks, we’ll look at CSX ( NYSE:CSX ), you’ll see the same type of thing. This is close to breaking out; we’ll say when it hits a new high here, about 26.85 when it tags the upper Bollinger Band. That’s a good time to be into this stock. Of course if it pulls back then you can anticipate the break out, but you don’t want to do that by buying up near resistance, you want to buy it when the stock pulls back to support at a little lower level.
If you’re anticipating the breakout buying near resistance, why not just give up a little bit of money and let the stock breakout first? Because the definition of resistance is, where the stock rolls over every single time, so let’s not go against the grain here.
Union Pacific ( NYSE:UNP ) also looks like it’s close to moving higher, It’s drifting down so this is a little early as well. What we need to see is a higher low. Trinity ( NYSE:TRN ) had a nice break out here, volatility squeeze led to a really nice expansion, several members caught that move and then kept a tight stop, and this is what you want to do, kept a tight stop and ultimately got stopped out right there. Now we’re just waiting for a rebound and for the stock to move higher, I think it’s too early to do that. After the kind of move that it had I think you just want to let this settle in a little bit.
And finally the actual stock that I intended to cover, I just kind of tossed those in there; Westinghouse Air Brake Technologies ( NYSE:WAB ). Look at the 50-day moving average; we had one break down here, that was a little scary, then ultimately the trend recovered and its continued to reassert itself. So on Thursday we got this pullback on high-volume, then on Friday the stock bounced a little bit.
It would have been nice to have seen volume be little bit higher on the bounce, I always like it when you see real big volume on a bounce because it suggests a turnaround, a big flush of stock and then a big rush of buyers to get in. We don’t really have that here yet, but what we do have is a really good definition for where support would be and that would be at the 50-day moving average. You’ve got 63.41 so you put a stop just a little bit below that key moving average and you’re going to be fine.