Trade Ideas Newsletter 05/13/2016

NSC is positioned for a contrarian breakdown

Based on the above analysis in NSC, traders should verify that their portfolio can handle increased risk from an additional position. Also ensure that NSC improves diversification in your current portfolio. Lastly, clever traders check how a new position matches up with not just their account, but the previaling market action as well. For example, take a look at the S&P 500. Is it moving to the upside or downside? Has it recently broken a key ceiling or floor? Be sure to line up your trading actions on NSC with the trend in the overall market.

CHART

Right now the proprietary sentiment levels, calculated by Traders For Wealth, indicate an suprisingly positive bias toward NSC. However, the price action in NSC has been moving down contrary to the sentiment. This could be a strong sign of an impending contrarian breakdown. Traders should view this as a bearish position and make sure it is confirmed by overall market action, and in line with their current portfolio.

Norfolk Southern Corp (NSC)

Norfolk Southern Corporation is a holding company. The Company owns a freight railroad, Norfolk Southern Railway Company. The Company is engaged in the rail transportation of raw materials, intermediate products and finished goods primarily in the Southeast, East and Midwest and through interchange with rail carriers, to and from the rest of the United States. The Company also transports overseas freight through various Atlantic and Gulf Coast ports. It provides logistics services and offers an intermodal network in the eastern half of the United States. The Company’s system reaches various individual industries, electric generating facilities, mines, distribution centers, transload facilities and other businesses located in its service area. The Company’s general merchandise market group is composed of five commodity groupings: chemicals; metals and construction; agriculture, consumer products, and Government; automotive, and paper, clay and forest products.