




After reviewing charts over the weekend I decided to make a change to one of my positions. I closed out my UNP short for break even. I am now starting to build a short position in KSU instead. I entered part of my position this a.m. at $33.06. My other entry points are $33.85 and $34.20 or higher. My time frame for this trade is a few months.
Why the change of mind? If you look at all the other rails they have all breached their 90 days and KSU has not. Now KSU maybe the leader of this sector, but I doubt it. KSU may be in play for a take over, for all I know. However sectors move in unison and one stock in the sector will not be left unscathed, while the others get taken down.
How I see it is the others will bounce for a while before the whole sector gets taken down to test its 200 day and at this point KSU has the greatest risk reward potential for me based on my analysis.
I know this may seem counter intuitive but look at the volume recently in KSU. I believe the big money is exiting and shorting this. They are setting it up to play catch up with its sectors peers. Wall street must take prices higher to get people to buy, when they want to get rid of something. This is very different from retailers who must discount what they want to get rid of.
Also once price starts piercing its 20 week m.a. frequently, as it has been doing, its a tell tale sign that a significant move lower is on its way. Furthermore MACD must reset itself much closer to the zero line before the next up leg to new highs begin and MACD is still a substantial distance away from the zero line. If the past is prelude to the present price will try and move up to its recent highs and it may make new highs, marginally, but I don't think so this particular time. While all this action is transpiring in price, MACD should stay crossed over down and not cross over up, thus creating the divergence I am looking for that frequently happens in this sector right before a significant correction occurs.
I am posting daily charts for most the rails, so you can see how different the action in KSU has been compared to it's peers. The daily chart's show all the rails breaking their 90 day's (purple line)except for KSU. As I stated I do not believe this is the leader of the group, so it has a lot of catching up to do.
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