Norfolk Southern Corp. (NYSE: NSC)

Norfolk Southern Corporation is engaged in the rail transportation of raw materials, intermediate products, and finished goods. As of December 31, 2013, it operated approximately 20,000 miles of road in 22 states and the District of Columbia. The company also operates scheduled passenger trains; transports overseas freight through various Atlantic and Gulf Coast ports; and provides logistics services. In addition, it provides bimodal truckload transportation services primarily utilizing RoadRailer trailers, a hybrid technology that facilitates over-the-road and on-the-rail transportation in the eastern United States, as well as in Ontario and Quebec through a network of terminals. Further, the company is engaged in the acquisition, leasing, and management of coal, oil, gas, and minerals; development of commercial real estate; telecommunications; and leasing or sale of rail property and equipment.

To review Norfolk’s stock, please take a look at the 1-year chart of NSC (Norfolk Southern Corporation) below with my added notations:

1-year chart of NSC (Norfolk Southern Corporation)

NSC has been trading sideways for the last 2 months. Over that period of time the stock has formed a decent resistance level at $97.50 (red). In addition, the stock has also created a level of support at $92.50 (blue). At some point the stock will have to break one of the two levels the rectangle pattern has created.

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The Tale of the Tape: NSC has clear levels of support ($92.50) and resistance ($97.50). The possible long positions on the stock would be either on a pullback to $92.50, or on a breakout above $97.50. The ideal short opportunity would be on a break below $92.50.

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

Follow me on Twitter: @cmtstockcoach