Railroads Start To Come Off The Rails

One of the nice traits about the railroads is they are one of my indicators to help with general market direction. I have found that when the railroads start to underperform the $SPX, that is typically a confirming signal of broader market weakness.

While I have been bearish for a while, the railroads starting to break the trend line of relative performance indicates that this will be a bigger than average breakdown. The PPO on the weekly chart is also breaking below zero. That doesn't happen very often. 

Here is a longer term picture.

Be careful out there!

Good trading,
Greg Schnell, CMT, MFTA