Freightcar America, Tidewater Pullback to Oversold Levels
Ever since the Dow transports began diverging from the Dow industrials in February, weakness in the stocks of the rail, shipping and airlines sectors has been hard to miss. Fortunately, much of this weakness has been taking place in markets still trading in bull market territory, giving these short-term setbacks that much more likelihood of being met with strong, snapback buying.
Monday’s trading saw very sharp selling in a pair of transportation stocks, both of which are now set to begin trading Tuesday morning in technically oversold territory. These pullbacks have also taken these stocks lower for a second day in a row, as well as to new, two-week lows.
In fact, in the case of one of these stocks, Tidewater (NYSE: TDW) is now trading at its lowest level in more than a month. Trading in bull market territory since early in the second half of January, shares of Tidewater rallied to test 52-week highs a month after crossing above its 200-day moving average, and finished lower on Monday by more than 5%.
TDW has neutral ratings of 7 out of 10 as of Monday’s close. The stock also has a positive edge in the short-term of more than one and three-quarters percent.
The other transportation stock that active investors and short-term traders may want to keep an eye on is Freightcar America (NASDAQ: RAIL). Shares of RAIL have a short-term, positive edge of more than one and a half percent and share neutral, 7 out of 10 ratings with Tidewater.
Also like Tidewater, Freightcar America recently rallied to significant long-term highs, in the case of RAIL, setting new, 52-week highs at the end of February. Profit-taking has taken the stock significantly lower over a short-term period of time, with traders selling the stock for eight out of the past nine trading days – including a sell-off of seven and a half percent in Monday’s session.
Selling like this in RAIL understandably has put the stock in short-term oversold territory. Note that RAIL spent the first three days of last week in technically oversold territory before edging higher in the second half of the week.
Ahead of trading on Tuesday, shares of Tidewater pulled back by more than 5%. Freightcar America closed lower by more than six percent.
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David Penn is Editor in Chief of TradingMarkets.com