I'm with Craig. It's a sign to let the engineer know the switchman's going in between to cut in the air. The sign was often given like shown in the photo, or as a couple of small loops, or horizontally straight across. During this time frame, the OTR interchanged cars to the SP at Alber's Milling (the building shown in the background). The OTR would shove the cars in, then the SP would come across Seventh Street (foreground) and retrieve them. The connecting track would to to the right, out of the picture.

Alber's Milling was a local landmark that often appears in photos taken in the area of SP's Oakland Mole, with was to the left out of the picture. The Oakland Pier interlocking tower was located dirctly across from the mill (extreme left, out of the picture). It controlled movements into and out of the Mole.

Another great photo. Thanks for posting it.