Todays Big Stock: CSX Corporation Common Stock (NYSE: CSX)

CSX Corporation (CSX) is a transportation supplier. The company provides rail-based transportation services, including rail service and the transport of intermodal containers and trailers. CSX’s principal operating company is CSX Transportation, Inc. (CSXT). It serves over 70 ocean, river and lake ports along the Atlantic and Gulf Coasts, the Mississippi River, the Great Lakes and the St. Lawrence Seaway. CSXT also serves thousands of production and distribution facilities through track connections to more than 240 short-line and regional railroads. It transports and exports coal to electricity-generating power plants, steel manufacturers, industrial plants and deep-water port facilities.

Please take a look at the 1-year chart of CSX (CSX Corporation) below with my added notations:

Like most stocks, CSX has had a rough go of it over the last month or two. CSX had been holding a very important level of support at $24 (red) for about 6 months prior to breaking lower. If you had been watching CSX, a short trade would have been advised on that break. A few weeks ago CSX finally found support at $20 (green), which had also been an important level for a couple of months last year. After rallying higher to $23, CSX is now testing the $20 area again. Could CSX bounce once again, or will the stock break even lower?

The Tale of the Tape: After holding $24 for several months, CSX broke that support and fell lower as expected. Now, CSX is finding support at a previous level of $20. If you are currently bullish on the overall market or CSX, a long entry at $20 would make a good trade with a stop set under $20. However, if you are looking to short CSX, the break of $20 would be your entry.

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

Todays Big Stock: SodaStream International Ltd. (NasdaqGS: SODA)

Sodastream International Ltd., along with its subsidiaries, is engaged in developing, manufacturing and marketing home beverage carbonation systems and related products. Sodastream develops manufactures and sells soda makers and exchangeable carbon-dioxide (CO2) cylinders, as well as consumables, consisting of CO2 refills, reusable carbonation bottles and flavors to add to the carbonated water. Its products are sold under the Sodastream name in most countries, and under the Soda-Club name or select other names in certain other countries. The company sells its products, through more than 35,000 retail stores in 39 countries.

Sodastream released their quarterly earnings report back on August 11th and handily beat their estimates. Unfortunately, future guidance was not received well by the market and the stock sold-off. I guess you could say that SODA has definitely popped, but just lower. How much lower can the stock go? When might be a good time to buy?

Please take a look at the 1-year chart of SODA (Sodastream International, Ltd) below with my added notations:

As you can see, it’s been rough sledding for SODA over the last couple of weeks since the company released their earnings (red).  I might have thought the stock would try to hold $50, but no dice. The next level down of $40 (green) did act as support on the earnings day, but SODA has since broken that level as well. Currently, the stock is holding under the $40 level. If SODA could break back above $40, the stock should move higher. However, a lower move would bring the levels of $35 (blue) and $30 (purple) back into play for a trade.

The Tale of the Tape: SODA has experienced a drastic sell-off since the release of their earnings report a few weeks ago. Currently, $40 is the important level to watch. If you are bearish on the market and/or SODA, a short trade on a move up to $40 make sense. However, if you are watching for a long trade, a break above $40 or a pullback to $35 would make sense with a stop below the level of entry.

Side note: If a long entry is made at $35 and that level was to break, another short play could be made. The next long entry would be on a fall to $30.

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

Todays Big Stock: Sourcefire, Inc. (NasdaqGS: FIRE)

Sometimes trading in the stock market can be complicated, and at times, confusing. It can be challenging to know what trade to make and when to make it. However, there are some trading opportunities that are clear and somewhat obvious. Usually, the “keep it simple stupid” trades tend to be the best. Of course, simple or not, that doesn’t mean the trade will always work out in your favor.  But, at least you knew it was the right trade at that time. A potential trading opportunity that appears to meet the “simple” description would be for the stock FIRE (Sourcefire, Inc).

Sourcefire, Inc. (Sourcefire) is a provider of cybersecurity solutions for information technology (IT), environments of commercial enterprises, including healthcare, financial services, manufacturing, energy, education, retail and telecommunications companies, and federal, state and local government organizations worldwide. Sourcefire solutions consist of multiple hardware, software and cloud-based product and service offerings. Its security solutions provide customers with a network security defense of assets and applications before, during and after an attack. It manages open source initiatives, such as Snort, ClamAV and Razorback.

Please take a look at the 1-year chart of FIRE (Sourcefire, Inc) below with my added notations:

It’s relatively obvious, isn’t it? FIRE has been holding a very important level of support in the area of $22.50 – 23.50 for the last 10 months. No matter what the market has or has not done this year, FIRE has not broken below that general area of support.  If the market should move lower, FIRE would most likely move closer to it’s support area for a potential trade.

The Tale of the Tape: FIRE has held a very important support level in the $22.50 – 23.50 area throughout the entire year or so. If the stock were to approach that level again, a trader would want to enter a long position with a stop under that entry. To narrow the “zone” down a bit, analyze the market to see if it is also at a potential support. If FIRE were to break its support area, a short position would be recommended 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

Todays Big Stock: Transocean Ltd (NYSE:RIG)

Whether the market goes up, or the market goes down, I like to trade stocks that forecast their movement either way. In other words, stocks that seem to tell me how to trade them. This could be in the form of a pattern, visibly important levels, or maybe a little bit of both. My simple belief is that knowing where to get in is half the battle. If you can find stocks that clearly show you their most important price points, then you will most likely be setting yourself up for success. One stock of many that I think fits that description would be that of RIG (Transocean, Ltd).

Transocean Ltd. (Transocean) is an international provider of offshore contract drilling services for oil and gas wells. Transocean operates in two segments: contract drilling services and other operations. Contract drilling services, the company’s primary business, includes contracting Transocean’s mobile offshore drilling fleet, related equipment and work crews primarily on a day rate basis to drill oil and gas wells. Its other operations segment includes drilling management services, and oil and gas properties. It participates in oil and gas exploration and production activities.

Please take a look at the 1-year chart of RIG (Transocean, Ltd) below with my added notations:

First, notice all of the important price levels I have highlighted on RIG. The stock seems to always find support or resistance on or at the increments of $5. For the 1st four months of the year you will notice the clear $75 support level that RIG created. Once RIG broke that support, down it went. Then RIG broke its $70 level, down it went. Next up was the $65 level, break, lower it went. Once the stock broke $60, $55 didn’t stand a chance.  Every time RIG broke a level of $5, the stock went lower. Did you also notice that every time RIG rallied it found resistance at those previous support levels of $5? Next up, the major support of $50 at the 52 week low.

The great thing about RIG is that it shows you how to trade it no matter what direction the market moves. If you like the short side of the market, you can short RIG on rallies back up to any $5 level. If you want a long play, you could buy RIG on any pullback to a $5 level or breakout through one of those levels.

The Tale of the Tape: RIG finds the levels of $5 important. These price points always appear to act as either support or resistance or usually both. You can trade this stock no matter what it does. If it rallies back up to $60, you could enter a short play. If it breaks back above $60, you could enter a long play. You could buy RIG if it comes down to $50, or short the stock if it breaks that $50 support. Etc., etc., etc!

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

Todays Big Stock: Vertex Pharmaceuticals (NasdaqGS: VRTX )

Do you think the worst is behind us? If so, or you simply think the rally that started last week still has legs, then you may want to prepare for a pullback.  After bottoming at 1100 last week, the S&P rallied almost 10% over the course of the next 4 days. A pullback could be on the menu, and that could be a great thing if you’re looking for the market to continue higher.  Pullbacks bring stocks down to previous levels and provide the trader with new entry points. One stock that I am watching for this type of opportunity would be VRTX (Vertex Pharmaceuticals, Inc).

Vertex Pharmaceuticals Incorporated (Vertex) is in the business of discovering, developing and commercializing small molecule drugs for the treatment of diseases. Vertex is engaged in phase-I clinical trials and/or nonclinical activities with respect to a range of additional drug candidates, including compounds intended for the treatment of hepatitis C virus (HCV) infection, cystic fibrosis (CF) and influenza.

Please take a look at the 1-year chart of VRTX (Vertex Pharmaceuticals, Inc) below with my added notations:

From March until August, VRTX had held the $45 level as support (green). After breaking that level of support a few weeks ago, VRTX fell back down to its previous level of $40 (pink). After rallying back up to the $45 level, VRTX broke back above that level earlier this week. If the market pulls back a bit, VRTX could come back down to the $45 level for a support bounce to eventually make its way back up to the $50-52 area. However, if VRTX does not hold the $45 level, the stock will probably test new lows for the year.

The Tale of the Tape: After creating a previous level of support at $45, VRTX has broken back above that level earlier this week.  Although VRTX should be moving higher overall from here, a pull back to the $45 level could provide a great entry for a support bounce. A long position could be entered at or near $45 with a stop below $45. A break back below $45 would negate the forecast for a move higher and a short position would be advised 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