Today’s Big Stock: Overseas Shipholding Group, Inc (NYSE: OSG)

Overseas Shipholding Group, Inc. is a tanker company engaged primarily in the ocean transportation of crude oil and petroleum products. At year-end 2010, Overseas Shipholding Group (OSG) owned or operated a modern fleet of 111 vessels of which 88 vessels operated in the international market and 23 operated in the U.S. Flag market. OSG’s new-building program of owned and chartered-in vessels totaled 11 International and U.S. Flag vessels, bringing the company’s total owned, operated and new-build fleet to 122 vessels. The company’s vessel operation consists of: crude oil, refined petroleum products, and U.S. Flag.

Please take a look at the 1-year chart of OSG (Overseas Holding Group, Inc.) below with my added notations:

The (2) main price levels to watch on OSG are very well defined. First, the $15 level that was initially support (green) in August and September of last year and eventually that same $15 level became resistance (red) over the next 4 months. Then, you can see how $12 (navy) commonly acts as support or resistance whenever it is approached. OSG is currently trading between these (2) important levels.

The Tale of the Tape: OSG has important levels at $12 and $15. If the stock pulls back to $12, or breaks through $15, a long trade would be advisable. However, if the stock were to break below $12, or approach $15 again, a short play could be made instead.

Before making any trading decision, decide which side of the trade you believe gives you the highest probability of success. Do you prefer the short side of the market, long side, or do you want to be in the market at all? If you haven’t thought about it, review the overall indices themselves. For example, take a look at the S&P 500. Is it trending higher or lower? Has it recently broken through a key resistance or support level? Making these decisions ahead of time will help you decide which side of the trade you believe gives you the best opportunities.

No matter what your strategy or when you decide to enter, always remember to use protective stops and you’ll be around for the next trade.  Capital preservation is always key!

Good luck!
Christian Tharp, CMT