Kansas City Southern is a railroad company founded in 1887. We bet you can guess where it is headquartered so we are not going to bother you with that information. Southern’s stock price reached 126.50 dollars a share in November, 2014, but shares have been trading below this level ever since. Currently near $93, it is much more interesting to see what we could expect from the company’s stock in the foreseeable future. Our outlook is based on Elliott Wave analysis of the monthly log chart, showing Kansas City Southern’s uptrend since 1975.
As visible, the entire advance, which took place between 1975 and 2014 could be seen as a five-wave impulse pattern. Within wave III we are able to count two degrees of trend down, since the structure of wave (1) and (3) of III is also easily recognizable. The stock market crash of 2008-2009 fits into the position of wave IV. It forms a bottom at $12.25 and gives the start of wave V to the north, which concludes the entire sequence. According to the theory, a three-wave correction comes after every impulse and typically retraces the entire fifth wave. If we apply this guideline to the Kansas City’s stock chart, it turns out we should prepare for a major slump all the way down to the 2009 lows near 12 dollars a share. It is a grim outlook, but that is what the Wave Principle dictates.
