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(UPDATE 11/09/09 3:36pm) WARREN BUFFET IS BEING FORCED TO SELL HIS POSITION IN UNP DUE TO THE BURLINGTON NORTH PURCHASE. THERE IS AN INCREASED PROBABILITY THIS WEIGHS ON UNP NEAR TERM & COULD EASILY BE 1 CATALYST EVENTUALLY CAUSING UNP TO "CLOSE THE GAP" FROM THE PRE BERKSHIRE/BNI PURCHASE. RISK MANAGEMENT KEY.
UNION PACIFIC CURRENTLY HAS STRONG LONG TERM CHARTS/TECHNICALS DESPITE POSSIBLE NEAR TERM RISK. VERY IMPORTANT FOR KEY SUPPORT LEVELS TO HOLD.
BERKSHIRE HATHAWAY BUYING BURLINGTON NORTHERN SANTA FE CORPORATION
PROVIDED POP. RISK OF UNP FALLING & "CLOSING THE GAP" FROM PRE BERKSHIRE/BURLINGTON POP.
LONG TERM TECHNICALS & TRENDLINES SUGGEST LARGE UP SIDE POTENTIAL FOR UNION PACIFIC AS LONG AS KEY SUPPORT IS NOT SIGNIFICANTLY BROKEN TO THE DOWNSIDE. A LARGE S&P 500 SELLOFF COULD EASILY TAKE UNP DOWN AS WELL.
INTERNAL COMPANY ISSUES COULD SINK UNP. ADDITIONAL DOWNSIDE PRESSURE COULD BE EXHIBITED IF BERKSHIRE HATHAWAY HAS TO SELL THERE EXISTING SHARES. RISK MANAGEMENT KEY ESPECIALLY CONSIDERING POTENTIAL NEAR TERM OVERALL MARKET RISK.
This Morning, 11/03/09 Berkshire Hathaway Announced A Deal To Buy Burlington Northern Santa Fe Corporation For $100 A Share. Noted Technical Analyst Ralph Acampora Recently Suggested That The Broader Stock Market Is Overbought & A Correction Was Due. Since Then, The S&P 500 Has Dropped More Than 5%. In Mr. Acamporas Note He Suggested That Investors Would Sell Banks & Look To Buy Technology, Railroads & Oil Drillers. Currently, Charts Suggest The S&P 500 Is, In The Very Near Term Oversold. The Overall Increased Risk Of A Drop Towards 980 On The S&P 500 Should Be Realized. That Being Said, The S&P 500 Is Near Term Oversold, The Nasdaq 100 Yesterday, 11/02/09 Hit The October 2nd 2009 Intermediate Term Low & Despite Breaking Slightly Below That Level Managed To Bounce. These Along With Multiple Other Indicators Signal An Increased Probability Of A Near Term Bounce, However Temporary It May Prove To Be. In Either Scenario, Todays Purchase Of BNI By Berskshire Hathaway Warranted A Closer Look At A Sector With Long Term Strong Technicals & Large Up Side Potential. One Stock In That Sector Is Union Pacific, "UNP". Realizing The Very Real Possibility That The S&P 500 Could Drop Near Term Towards 980 Or Lower Is The First Component Of This Analysis As A Broad Market Drop Could Easily Pull Any Individual Stock With It. From There, A Closer Look At UNPs Charts Occurred. It Should Be Noted, That Often When A Large Pop Higher Occurs Due To An Event, There Is An Increased Probability Of A Return To That Pre Pop Level. While This Does Not Always Happen, It Happens Enough For Many Great Traders To Wait For That Potential Pullback. Traders Often Call This Phenomena "Closing The Gap", i.e. The Stock Moved Back To The Pre "Pop" Level & Thereby Closed The Gap From The News Event. Realizing The Potential For This Risk Is Important & Should Be Taken Into Account In Any Potential Trade.
UNP STRONG UPTREND & CURRENT STRONG TECHNICALS. IMPORTANCE OF KEY SUPPORT HOLDING ON ANY POTENTIAL PULLBACK. CONTINUALLY UPDATING NATURE OF TECHNICAL ANALYSIS AS PRICE ACTION TESTS & BREAKS KEY SUPPORT & RESISTANCE LEVELS. RISK MANAGEMENT.
UNP Has Been In A Strong Uptrend Along With The Broader Indexes Since March. Trendlines Suggest That There Is An Increased Potential For Dramatic Up Side From Current Levels (This Piece Will Be Updated As Time Allows With More Specific Price Targets). That Being Said, It Is Important To Note That Any Up Side Potential Is Very Dependant On Key Down Side Support Levels For Both The S&P 500 & Any Individual Names Not Being Significantly Broken. Recent S&P 500 Technicals Suggest There Is An Increased Probability Of The Index Dropping Towards 1,020 & Then Possibly Down To 980. While In The Very Near Term The Index Is Oversold & A Bounce Could Develop, The Broader Market Potential Weakness Should Be Taking Into Account In Any Trade & Overall Portfolio Allocation.
S&P 500 LONGER TERM 1,250 UP SIDE PRICE TARGET AS LONG AS INDEX DOES NOT SIGNIFICANTLY DROP BELOW 943.85
The S&P 500 Bottom Formation & Subsequent Price Action From March Indicates That As Long As The Index Does Not Drop Significantly Below 943.85 Then There Is An Increased Probability Of A Rise Towards S&P 500 1,250. A Drop Below 943.85 Would Endanger The Potential For Any Possible Long Term Rise Towards 1,250. This Risk Should Be Realized In Any S&P 500 Trade & Individual Stock Trade. For Very Near Term Traders The Thought Of Riding UNP Down Even .02% Is Often Unbearable. There Is A Very Real Reason To Want To Avoid Any Portfolio Loss However Small It May Be. Many Great Traders Make A Practice Of Never Allowing A "Winner" To Turn Into A "Loser". In The 1920's, Many People Around The World Saw The Railroad Industry As The Leading Sector. Railroads Helped Power The Great Bull Market Of That Era. Unfortunately, Many Railroad Stocks Fell More Than 95% From Their Peaks In 1929 To The Eventual Bottom Of That Market Cycle. This Reference Is Brought Not To Compare Todays Market Environment With The 1920's But Rather To Point Out That Many Great Stocks Whose Trendlines Once Suggested Large Up Side Potential Fell Dramatically Without Reaching Those Potential Up Side Targets. As Key Support Levels Were Broken To The Downside, Trendlines & Technicals Gave Lower Price Projections. This Is Part Of The Intrinsic Ever Changing Nature Of Technical Analysis Which Focuses On Price Action, An Ever Moving Focal Point. Another More Recent Example Of Strong Technicals Which Deteriorated & Then Gave Lower Price Projections Is For Many Of The High Flying Stocks During The 1990s Tech Bubble. Realizing The Continually Updating Nature Of Technical Analysis & The Importance Of Key Support Levels To Hold On Any Pullback Is One Very Important Point To Consider In Any Potential Trade. Additionally, The Importance Of Managing Overall Portfolio Risk Cannot Be Understated Even For Stocks With Current Excellent Underlying Technicals.
With All Of This In Mind, UNP Will Continue To Be On The Radar. Risk Management Including Hedging Options, Stop Loss Orders & Appropriate Portfolio Sizing Will Be A Natural Accompaniment To Any Potential UNP Position.
For Recent & In-Depth Analysis Including Technical Analysis Of The S&P 500, Global Markets, Oil & Currencies Please View The Links Below:
S&P 500 Bearish Trend Line Break, Mixed Bull & Bear Institutional Trades, Oil Testing Support W/Possible Move Towards $89, Currencies, 3rd Party Links:
Berkshire Hathaway Buying Burlington Northern Railroad Confirming Technical Analysis By Ralph Acampora Suggesting Railroads Should Rise...
Bullish & Bearish Institutional Buys-Mixed Signals Risk Remains:
For Ralph Acampora's Technical Analysis Signaling A Correction Where Investors Sell
Financials & Look To Buy Technology, Oil Drillers & Railroads Plus Additional Market Commentary & Technical Analysis Please View This Message From October 17th, 2009:
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