Portfolio Update: PE and CNI

There are two strategies to picking stocks: studying the fundamentals or the technicals. Fundamental analysis involves researching a company's balance sheet and management plans to make an investment decision. You are betting on the company's ability to grow and generate more income. Technical analysis involves looking at past metrics of the stock price's performance to model a future trajection. You are betting on other investor's ability to recognize the company's potential and drive the price up (or failures and down if shorting).

As an investor you want to do both by creating a buy list of stocks that satisfy the fundamentals but hold out on trading until it meets the technicals. This is the boat I'm in with a list of stocks that are great fundamentally but priced far from my technical entry point.

With that in mind I have doubled my Parsley Energy position (PE) based on the technicals and news of their expanded field purchases. Looking at the daily chart Parsley has reached a bottom on its MACD indicator (I bought right as the black line crossed the red line) and trading volume is below 50 on the RSI indicator.

For Canadian National Rail (CNI) I'm paying attention daily for the sign to lock in my profits. It's my only stock in the oversold territory (note the RSI around 80) but the MACD isn't leveling off for a crossover yet. As soon as it does and turns downward I'll put in my sell order.