Canadian Pacific Railway Limited (NYSE: CP)

“Today’s Big Stock” is now live on Facebook!! The TBS page will be used to highlight all things technical analysis and to provide alerts when potential TBS trading opportunities appear or important market moves occur. Click here to be one of the first to like the page to receive live updates and articles!

Canadian Pacific Railway Limited, through its subsidiaries, operates as a transcontinental railway providing freight transportation services, logistics solutions, and supply chain expertise in Canada and the United States. It transports bulk commodities, including grain, coal, sulphur, and fertilizers; merchandise freight; finished vehicles and automotive parts; forest products, which include wood pulp, paper, paperboard, newsprint, lumber, panel, and oriented strand board; and industrial and consumer products comprising chemicals, energy, and plastics, as well as mine, metals, and aggregates. The company provides rail and intermodal transportation services over a network of approximately 14,700 miles serving the principal business centers of Canada, from Montreal to Vancouver, British Columbia; and the Midwest and Northeast regions of the United States. Canadian Pacific Railway Limited was founded in 1881 and is headquartered in Calgary, Canada.

To review Canadian’s stock, please take a look at the 1-year chart of CP (Canadian Pacific Railway Limited) below with my added notations:

1-year chart of CP (Canadian Pacific Railway Limited)

After pulling back from March until June, CP has been in a steady trend higher. Along the way, CP has formed a nice trend line of support (blue). Always remember that any (2) points can start a trend line, but it’s the 3rd test and beyond that confirm its importance. Obviously CP’s trend line is very important to the stock since it has been tested on multiple occasions. That trendline support is currently approaching $90.

The Tale of the Tape: CP has created a nice trend line of support over the last (5) months. A long position could be entered on a pullback to the trend line support, which is approaching the $90, with a stop placed under the entry. A short position could also be entered if CP were to break the trend line support.

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