CANADIAN PACIFIC KANSAS CITY Ltd (CP.TO) - September 23, 2023
Canadian Pacific Kansas City Ltd (CP.TO) has been sliding down the rankings in the SIA S&P/TSX 60 Index Report since April. This may be seen as a sign of concern among investors that like the airlines, railroad earnings may be impacted moving forward by rising fuel and labor costs. CP.TO has dropped 6 positions within the Yellow Neutral Zone over the last month to 26th place, its lowest rank since June of 2022.
Transportation stocks in general have been struggling for some time. The last remaining notable Transportation stock still in the Green Favored Zone of a large cap report is FedEx in the SIA S&P 100 Index Report.
This chart highlights a shift in Canadian Pacific (CP.TO) shares from accumulation to distribution over the last year. Between December and July, the shares failed three times to break through the $110.00 to $112.50 range, indicating significant resistance in that zone. The last two rally attempts ended in a bearish Rising Wedge and a failed ascending triangle, both signs that the tide was going out. This month, the shares have turned decisively downward, setting a lower high, taking out channel support and closing yesterday below $100.00 for the first time since last November.
Previous support in the $101.00 to $102.00 area may now reverse polarity to become initial resistance. Next potential downside support may emerge at previous lows near $94.00 or a measured $91.00.
Canadian Pacific Kansas City Ltd (CP.TO) shares have turned downward this month. In August, CP.TO failed to break through $111.59 resistance for a second time and since then they have been backsliding. In recent weeks a number of bearish signals have appeared including the snapping of an uptrend support line, and the completion of a series of bearish patterns including a Double Bottom, a Spread Double Bottom and a Spread Triple Bottom.
CP.TO has also dropped under the $100.00 round number and is currently testing support near $98.95 where a breakdown would complete another pending spread triple bottom and confirm the start of a new downtrend. Should that occur, next potential support may emerge near $94.15, where two trend support lines converge, $91.40 based on a horizontal count, of $86.10, based on previous column lows. Initial resistance on a bounce appears near $104.05 based on a 3-box reversal.
With a bearish SMAX score of 4, CP.TO is exhibiting weakness against the asset classes.
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