Norfolk Southern (NSC) made its move to the upside as we favored in our review last month, saying, "NSC should make up its mind soon -- a breakout above $125 or a breakdown below $110. I am not sure that a break below $110 would be all that profitable, as there is a band of support in the mid-$90s. I would probably favor an upside breakout with a reasonable sell-stop."
NSC broke out over $125 earlier this month, so let's check the route.
In this daily bar chart of NSC, above, we can see the upside move with prices now firmly above the rising 50-day moving average line as well as the rising 200-day line. The daily On-Balance-Volume (OBV) line has been improving the past two months, signaling more aggressive buying. The Moving Average Convergence Divergence (MACD) oscillator is well above the zero line after crossing in early September, but the two moving averages of this indicator look like they are narrowing. Something to keep an eye on.
In this weekly bar chart of NSC, above, we can see this stock is above the rising 40-week moving average line. The weekly OBV line is clearly rising and confirming the advance. The weekly MACD oscillator has crossed to the upside from above the zero line for a fresh outright go-long signal.
In this Point and Figure chart of NSC, above, we can see the breakout and a $162 price target.
Bottom line: NSC broke out of a seven-month consolidation pattern, so the current advance probably has further to go. In the short run, the rally is extended so traders looking to add to longs should try to buy NSC at $130 or better, looking for around $150 to $162 on the upside. A close back below $123 would get me to move to the sidelines.