CSX Transportation...Not Full Steam Ahead
CSX reported near double-digit top-line growth for their fourth quarter after the closing bell on Wednesday. CSX's volume and pricing strength led to mid- to high-single-digit revenue growth in a number of freight categories, including chemicals, automotive, forest products and coal. However, CSX told investors to expect low-single-digit revenue growth in 2019, a 7% decrease from 2018.
CSX is in an "unfamiliar position," as Wednesday's earnings report did not consist of its typical big beat and management's tone during the conference was void of any "swagger," Shanker said in a Thursday note.
CSX said it can't identify any trend in its business to justify slower 2019 growth, and removing a low-single digit price increase from the equation, the company appears poised for minimal to zero volume growth, the analyst said.
Looking back at the company's performance in 2017 and 2018, it was clear management was focusing on "raising the bar," Shanker said. Yet CSX has shifted its tone in 2019 and beyond to "keeping the bar there," he said.
CSX guidance is just another example of economy slowing down. CSX’s price chart is breaking down, just like the iShares Dow Jones Transportation ETF, IYT which includes companies within the trains, planes and truck sector, of which why I thought the Transports topped out months ago.
I’m Calling The Top In The Transports
Lets go to the CSX chart to break down the price action.
On the monthly charts, price formed an “M” pattern. A “M” pattern is no different than a double top. Double tops are reversal patterns. A double top signals the price is no longer rallying, and that lower prices are potentially coming.
Also, the December candle closed below the 12 simple moving average for the first time since July of 2015.
On the daily chart the chart suggests the 200 simple moving average will serves as resistance and within the next couple of weeks, the 50 simple moving average will cross the 200 simple moving average resulting in a death cross.
CHART
Also, on the daily chart we price is making lower highs and lower lowers.
CHART
The chart suggests that price will make another leg down, but eventually getting to the weekly demand at $46.50.
This post is my personal opinion. I’m not a financial advisor, this isn't financial advise. Do your own research before making investment decisions.
We will need to get used to these types of words being used for earnings reports as we start the new year. Maybe sectors will start to see the leak in revenue!
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Companies earnings throughout the sectors are mixed at the moment, it won't hit the markets until more companies announce lower forecasts.