Kansas City Southern (NYSE: KSU)

Kansas City Southern, through its subsidiaries, provides domestic and international rail transportation services in North America. Its rail network comprises approximately 6,700 route miles. The company serves the chemical and petroleum, industrial and consumer products, agriculture and minerals, energy, intermodal, and automotive markets.

Take a look at the 1-year chart of Southern (NYSE: KSU) with the added notations:

1-year chart of Southern (NYSE: KSU)

KSU seems to have created a key level of support at $105 (green). The stock has fallen pretty hard back down towards that support again, and traders might be able to expect some sort of bounce. However, if the $105 support level breaks, lower prices should follow.

The Tale of the Tape: KSU has a key area of support at $105. A trader could enter a long position at $105 with a stop placed under the level. If the stock were to break below the support, a short position could be entered 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