Canadian National Railway (CNI) Plunges 2.7% Amid Analyst Hype and Bearish Technicals – What’s Brewing?

Summary
• CNI slumps to $99.075, down 2.7% from $101.83
• Intraday range: $98.71 to $102.56
• Analysts raised Q4 2025 EPS to $2.15 with 'Outperform' ratings
• Options chain shows heavy put buying with CNI20250815P95 trading at 105.88% price change
Canadian National Railway is facing a sharp intraday correction as bulls and bears clash over its fundamentals and technicals. Despite recent analyst upgrades and a dividend hike, bearish momentum has taken hold, dragging the stock below key levels. Traders are now scrutinizing options flows and volatility metrics to gauge the next move in this high-stakes railroad battle.

Bearish Breakout Amid Analyst Optimism
CNI's 2.7% drop defies recent analyst enthusiasm, with Raymond James Financial raising Q4 2025 EPS estimates to $2.15 and maintaining an 'Outperform' rating. The divergence between bullish fundamentals and bearish price action suggests short-term profit-taking or renewed concerns about the rail sector's macroeconomic exposure. With the stock trading below its 30-day moving average of $104.05 and breaking down from the $102.56 intraday high, technical indicators like the MACD (-0.133) and RSI (43.25) confirm a shift in sentiment. The move appears driven by profit-liquidation after recent gains and potential positioning for earnings season.

Rail Sector Mixed as CNI Diverges
While CNI struggles, its sector peers show mixed performance. CSX (up 0.01%) and NSC (flat) remain resilient, suggesting CNI's decline is stock-specific rather than sector-wide. The railroad industry faces crosscurrents: CPKC's recent service issues contrast with BNSF's infrastructure investments. CNI's bearish breakout indicates divergent positioning from its peers, possibly due to valuation concerns or execution risks around its Q4 guidance.

Options and ETFs for the Bearish Playbook
• 200-day MA: $104.32 (below)
• 30-day MA: $104.05 (below)
• RSI: 43.25 (oversold)
• MACD: -0.133 (bearish)
• Bollinger Bands: $100.46–$106.97
CNI is in a short-term bearish phase, with key support at $100.46 (lower Bollinger band) and resistance at $103.71 (middle SMA). The RSI at 43.25 suggests oversold conditions, but the MACD's negative value and bearish Kline pattern indicate momentum is tilted downward. Traders should monitor the $100.46 level for a potential bounce or breakdown to $98.71. The Invesco S&P SmallCap Energy ETF (PSCE) and SPDR S&P Metals & Mining ETF (XME) offer leveraged exposure to commodity-linked sectors that could influence CNI's freight volumes.
Top Options Plays:
• CNI20250815P95 (Put):
- Strike: $95
- Expiry: 2025-08-15
- IV: 27.84% (moderate)
- Delta: -0.279 (moderate sensitivity)
- Theta: -0.023 (moderate time decay)
- Gamma: 0.043 (good price sensitivity)
- Turnover: $8,209 (liquid)
- Leverage: 70.70% (high reward potential)
- This put offers a strong bearish play with good liquidity and leverage. With 70.70% leverage, a 5% move below $99.075 to $94.12 would yield significant gains.
• CNI20250919P100 (Put):
- Strike: $100
- Expiry: 2025-09-19
- IV: 23.39% (moderate)
- Delta: -0.505 (high sensitivity)
- Theta: -0.011 (low time decay)
- Gamma: 0.041 (good price sensitivity)
- Turnover: $12,180 (liquid)
- Leverage: 23.57% (moderate reward)
- This put provides a longer-dated bearish position with strong delta for capturing further declines. The 23.57% leverage offers decent reward potential if CNI breaks below key support levels.
Payoff Estimation:
• CNI20250815P95: A 5% downside to $94.12 would yield $9.96 profit per contract (current price $99.075 to $94.12)
• CNI20250919P100: A 5% downside to $94.12 would yield $5.88 profit per contract
Action: If $100.46 support breaks, CNI20250815P95 offers high-reward potential. Watch for a confirmation below $98.71 for a more aggressive short.

Backtest Canadian National Railway Stock Performance
The CNI Composite Index has historically shown a mixed performance after experiencing a -3% intraday plunge. The backtest data reveals that the 3-day win rate is 51%, the 10-day win rate is 48.33%, and the 30-day win rate is 47.49%. While the index tends to bounce back in the short term, the returns over the 10-day and 30-day periods are slightly negative, with a maximum return of only 0.11% over 30 days.

Bearish Momentum Gains – Position for a Breakdown or Bounce
CNI's sharp intraday decline confirms a shift in sentiment, with bearish technicals and heavy put buying signaling potential for further downside. While analysts remain optimistic, the stock's action suggests profit-taking or renewed concerns about execution. Traders should closely watch the $100.46 support level and the $98.71 intraday low. If the breakdown continues, the CNI20250815P95 put offers a compelling bearish play with high leverage. Meanwhile, CSX's 0.01% gain highlights the sector's mixed performance, suggesting CNI's move is stock-specific. Position now for a potential breakdown below $98.71 or a bounce above $103.71 for a reversal trade.