Brief Update: These two names have not moved one way or the other so I have not played either. At this point CSX is 4 up (64) 4 down (56)... not safe enough in this market. I think the company will perform well and we may see a bounce tomorrow... but I like to be on the safe side in this market. Regarding FXI it has held up very nicely in the face of this market. Financials fall, but now the Asian stocks don't follow. Pay attention to FXI and some oversold Chinese names... as always I recommend being careful and using stops.
-------------------------------------------------
Here is a play that may boost your returns this week. The company is CSX. They are right in the sweet spot of the transportation boom of coal, iron, and agricultural products from North America. They are also involved in transport of products, including coal to electricity plants, in North America. And they transport many other items as well. A nice feature of their business is the specialized transport of commodities from places where the mining takes place to link with the major railroad networks. They also have transport vessels and have a presence in Alaska, from which they have the potential to ship LNG to Asia. Here is the profile from yahoo finance:
CSX Corporation provides rail-based transportation services in North America. The company offers traditional rail service and the transport of intermodal containers and trailers. It also provides coast-to-coast intermodal transportation services linking customers to railroads, through trucks and terminals. CSX Corporation transports crushed stone, sand and gravel, metal, phosphate, fertilizer, food, consumer, agricultural, paper, and chemical products. In addition, it delivers coal, coke, and iron ore to electricity generating power plants, as well as finished vehicles and auto parts.
The company also engages in the real estate sale, leasing, acquisition, and management and development activities; the operation of a resort; and leasing equipment and vessels. As of December 28, 2007, it operated approximately 21,000 route mile rail network, 4,000 locomotives, and 222,000 freight car fleet, serving various population centers in 23 states east of the Mississippi River, the District of Columbia, and the Canadian provinces of Ontario and Quebec. CSX Corporation was founded in 1827 and is based in Jacksonville, Florida.
Here is a nice article on CSX.
As I've mentioned in the last post almost no stocks on the long side are buy and hold right now. Some of the exceptions may include the commodity stocks. However, as a trade, or if the market turns positive for a while, this may be a very nice play. The company reports earnings on Tuesday after close and has a CC on Wednesday. It has exceeded earnings repeatedly (see analyst estimates) and the longer-term estimates have been going up. That is a good sign for a bounce here. Let's look at the technicals...
As you can see the stock has recovered from a recent downward trend and has moved back up. Please use Bollinger bands in your charts! You can see here how it bounced down precisely from the middle Bollinger band. There are a couple of ways that I am considering playing this, depending on the market:
1. On a retreat to 58 or preferably 57/56 I may buy some... with a stop just below 56. The upside target is minimally the 50 day SMA at 64, the next stop is some recent resistance at 66, and then there exists the upper end of the Bollinger, also close to the the all time high around 68. Lets be conservative. If we assume a buy at 58 and a target of 64 this represents 6 up to 2 down... or 3:1... not bad at all. If the stock moves further we can get 4:1 or even 5:1.
2. If it passes the middle Bollinger band with volume I would consider a buying at that region... with a stop a bit below the middle Bollinger. In each case whether I buy in here or not depends heavily on the overall market flow. I expect we may get a downward bounce in the market as a result of the IndyMac failure. This could create a buying opportunity if the negativity isn't too strong...
---------------------------------------------------
Here's another play that is really beginning to grab my attention: FXI. It is not an individual stock but an ETF... This segment of stocks has been sold off as if it were financials... but the difference is that earnings may be quite good for this group. The bears have had their way thus far but in addition to earnings we have the Chinese Olympics coming up in August (August 8-24). That spotlight on China, as long as there are no major public relations disasters, is likely to generate some heat for this very much oversold sector. As I mentioned on my last posts there are a lot of greedy bears out there. The smart ones, I believe, are already beginning to take profits. Just like those long from March to May started selling long positions for profits in early to mid May. I mentioned the potential strength in the oversold Chinese sector with someone today and he pointed out that FXI has already started to turn up. A look at the charts shows the potential for a very bullish run here. As I discussed in detail in this post bear markets often tend to have secondary corrections that go against the primary trend. I have been looking at oversold Chinese companies and now at FXI as well. Let's take a look at the chart.
Notice the large decline and recent move up. I expect there may be some selling pressure on Monday due to IndyMac. Additionally, we are right up against the middle Bollinger Band and are starting to turn down a bit. However, if FXI drops and starts to move up it may be a very strong buying opportunity for a play into and through the Olympics. At the very least I would look for a potential trade... look at the MACD (bullish) ... a bounce from the 127 or certainly 125 region could be very nice with a stop under the lower Bollinger band (123.79). I still recommend stops on any long plays until we start to see a market wide move upwards in the intermediate (weeks to months) trend. By the way, this goes for the CSX play as well. We may be a bit early here and there is the danger of more news from the financial sector but now we have the catalyst of earnings for strong stocks. Ch....heck it Out!
As always, these are not 'stock tips'. With all due respect, the Yellow Rose isn't about screaming 'Buy Buy Buy' or 'Sell Sell Sell'. Instead, 'the Rose' aims to provide an intelligent, well thought -out approach which hopefully includes information that may help You and I succeed in the markets...
"The Yellow Rose Street Beat" is for informational purposes only. It does not give investment advice.
Posts
2 comments:
Who knows where to download XRumer 5.0 Palladium?
Help, please. All recommend this program to effectively advertise on the Internet, this is the best program!
Some may feel squeamish about eating it, but rabbit has a fan base that grows as cooks discover how easy they are to raise — and how good the meat tastes.
Post a Comment