Summary:

  • CSX Corporation (CSX) tanked 10% on Wednesday, after the railroad company posted earnings and revenue that missed Wall Street expectations.
  • Based on its market cycles, we believe the stock has additional downside risk.

The company reported earnings per share of $1.08 and total revenue of $3.06 billion, compared to analyst estimates of $1.11 and $3.15 billion. Management updated its forecast, now expecting revenue to decline 2% for the year.

CEO James Foote said that, “Both global and U.S. economic conditions have been unusual this year, to say the least, and have impacted our volumes. You see it every week in our reported carloads.”

Our approach to stock analysis uses market cycles to project price action. We believe CSX is now in the declining phase of its current cycle.Having broken the low which ended the previous cycle is a bearish indicator that suggests lower prices for months to come. You can see on the chart our projection points to the stock falling below $65 by Q4.

For more from Slim, or to learn about cycle analysis, check out the askSlim Market Week show every Friday on our YouTube channel.