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Canadian Pacific Kansas City Ltd. - (CP.TO) - May 22, 2024

SIA Charts’ relative strength rankings help investors manage risk by identifying stocks and sectors which are underperforming or starting to underperform on their own or alongside their sector indicating that capital is moving elsewhere.

Transportation stocks, particularly railroads and courier companies, have been struggling in relative strength rankings lately, which may potentially be a sign of a slowing economy. Canadian Pacific (CP.TO), for example, fell out of the green zone of the SIA S&P/TSX 60 Index Report in March, spent the last two months sliding down through the yellow zone and yesterday, it dropped back into the Red Unfavored Zone after falling two spots to 32nd place. CP.TO has dropped 10 positions in the last month.

Since leaving the green zone in March, CP.TO shares have declined by 7.1%, compared with a 1.3% gain for the S&P/TSX Composite Index over the same time frame.

Candlestick Chart Starts to Backslide.

Canadian Pacific (CP.TO) shares staged a big rally between January and March, but that now appears to be over for now. Over a three-week period, the advance stalled out short of $122.00. Since then, CP.TO has been retreating, with a downtrend of lower highs emerging and the shares dropping and remaining below their 10-week moving average. So far this appears to be a correction within an uptrend, but if $108.50 initial support fails, a bearish pending descending triangle would complete and signal the start of a new downtrend. Should that occur next potential support may appear near $100.00 where an uptrend line and round number converge, followed by the October low near $94.00. Initial resistance appears at the 10-week average near $115.00.

Point and Figure Chart Pulls Back.

Last month, a rally in Canadian Pacific (CP.TO) shares peaked short of $123.50. Since then, their previous gains have eroded. CP.TO has now given back over 50% of its previous X column, triggering a bearish High Pole Warning, and initial support at its previous $112.00 breakout point has failed. Initial downside support appears near the $100.00 round number, where previous support has emerged, followed by its December low near $93.65. Initial resistance on a bounce appears near $116.45 based on a 3-box reversal.

With its bearish SMAX score (which is a near-term 1 to 90-day indicator comparing an asset against different equal-weight asset classes) of 4 out of 10, CP.TO is exhibiting short-term strength weakness against the asset classes.

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