Today’s Big Stock: Canadian National Railway Company (NYSE: CNI)

Canadian National Railway Company (CN) is engaged in the rail and related transportation business. The company manages its rail operations in Canada and the United States. CN’s network of approximately 20,000 route miles spans Canada and mid-America, connecting three coasts: the Atlantic, the Pacific and the Gulf of Mexico. CN’s network, and its co-production agreements, routing protocols, marketing alliances and interline agreements, provide CN customers access to all three North American Free Trade Agreement nations. In August 2011, the Company sold IC RailMarine Terminal Company to Raven Energy, LLC. In March 2011, Metrolinx acquired CN’s Kingston Subdivision rail line. Effective December 31, 2011, the Company complete the merger of three of its the United States operating subsidiaries, which include Duluth, Missabe and Iron Range Railway Company, Duluth, Winnipeg and Pacific Railway Company, and Wisconsin Central Ltd.

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

 

 

CNI has created a couple of important price levels to watch. First, CNI has formed a clear resistance at $80 (navy), which would also be a 52-week high breakout if CNI could manage to move above it. In addition, the stock is climbing a short term, up-trending support level (green) over the last 2-3 months. These two levels combined have CNI stuck within a common chart pattern known as an Ascending Triangle. Eventually, CNI will have to break one of those (2) levels.

The Tale of the Tape: CNI has an up trending support and a 52-week resistance level to watch. A long trade could be made on a pullback to the support, or on a break above $80. A break below the up trending support would be an opportunity to enter a short trade.

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