Tim Anderson, managing director of MND Partners – a division of TJM Investments, told Benzinga that investors should keep an eye on the transportation sector.
Anderson pointed out the recent price and volume action in CSX Corporation CSX and Norfolk Southern Corp. NSC.
A Look At CSX
According to Anderson, it was "wildly impressive" how CSX rallied from its six-month lows to the second highest close in 2015 in a span of just five days on three to four times the average daily volume.
CSX "has rallied sharply for five consecutive days on very heavy volume, and Wednesday posted its second highest close of 2015! This is an amazing 'outside reversal' on very heavy volume that is screaming 'buy me,'" Anderson told investors in a recent note.
A Look At Norfolk Southern
Norfolk Southern Corp. was also highlighted following its sharp correction after a Q1 earnings warning that sent the stock 5 percent lower on Tuesday, with the company "making cautious comments for the remainder of the year."
Anderson explained, "In the last four days, the stock has rallied sharply, closing yesterday +$0.10 above the close last Monday before their earnings warning.
Overview
"In both [CSX and NSC], investors are clearly looking past any load-level shortfalls from the sharp decline in the price of oil and/or the war of coal. The price action in these stocks just can't be ignored," Anderson concluded.
Looking ahead, Anderson told investors, "If you want to be Bullish for the remainder of 2015, look no further than the action within the [Dow Jones Transportation Average].
"Tuesday, the Transports rallied 0.5 percent to close at 8863. This is the highest close in over a month and the second day in a row closing above 8800. On its own, this is constructive, but still needs to hold the recent move and get through the 50 day MA at 8900."
Other Highlights
Anderson also discussed with Benzinga a new Department of Transportation (DOT) ruling that limits rail cars carrying oil to 40 mph. The ruling may also require retrofitting, "which is probably positive for equipment suppliers."
As for the impact of the new speed limit, Anderson was "trying to get a handle on whether the 40 mph restriction is in some counterintuitive way positive for the rails," although the ruling was preferable to ending rail transport altogether for the industry.
CSX Corporation recently traded at $37.02, up 0.35 percent.
Norfolk Southern Corp. recently traded at $105.38, down 0.78 percent.
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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