Union Pacific Chugs Higher, But Market Cycles Point To Limited Upside

Summary:

• Union Pacific Corporation UNP soared on Tuesday morning, trading over 8 percent higher.
• The move comes on the heels of a new COO, announced Monday, and a slew of analyst upgrades.
• However, the stock’s market cycles suggest it is likely to turn-around in the coming months.

Union Pacific Corporation Stock Weekly Chart

Union Pacific announced industry veteran Jim Vena will begin serving as Chief Operating Officer later this month. Vena is the former COO for the Canadian National Railway CNI. This move prompted four equity analysts to upgrade the stock.

CEO Lance Fritz said, “Jim's vast knowledge of the precision scheduled railroading model brings expertise that will enhance the work already underway." Specifically, Vena will lead implementation of the company’s 2020 strategy.

Looking at the market cycles for UNP, we can see that the stock is in the rising phase of its current cycle. However, this chart is configured negatively, as it ended its previous cycle below the point at which it started. This suggests a likelihood of failure in our resistance zone. As such, we believe the present rally will fail, heading lower into April.

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