Norfolk Southern (NSC) has been chugging higher for most of the past year, but prices have stalled since late September and some signs of weakness have surfaced. Bullish investors would like to see NSC climb higher like the little engine that could, but sometimes the markets are more complex than a children's book. Let's go through our usual checklist of charts and indicators to see if NSC can push further to the upside.
In this daily bar chart of NSC, below, we can see that the price of NSC stalled in the $130-$135 area since the middle of September. Prices tested the rising 50-day moving average line recently and could close below it today. The On-Balance-Volume (OBV) line has been declining since the beginning of October suggesting that sellers of NSC have been more aggressive with heavier trading volume occurring on days when the stock has closed lower. In the bottom panel is the 12-day momentum study which shows a bearish divergence in September and October as prices made equal highs momentum made lower highs.
In this weekly bar chart of NSC, below, we can see that prices are above the rising 40-week moving average line. Volume has been declining since March. The weekly OBV line turned up at the end of last October and could have peaked in October. The weekly Moving Average Convergence Divergence (MACD) oscillator has narrowed towards a possible bearish crossover. This signal, should it come to be would be a take profits sell signal.
In this Point and Figure chart of NSC, below, we can see a downside price target of $119.43. A decline to $119.43, should it happen, would probably break the rising 200-day average line.
Bottom line -- the price of NSC looks a little vulnerable. Traders might want to book some profits looking to rebuy at a better level while longer-term investors should only worry if prices close below $115 as this could precipitate further losses.