Enablence unable to break above resistance

Mar 22nd, 2010 – 1 Comment

At this point it appears that ENA has gotten ahead of itself and needs to consolidate its recent advance before it can break above resistance at $0.65.


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enablence

I heard about this penny stock manufacturing FTTH products. Your thoughts on Enablence?

Jim

 

Hi Jim,

Thanks for the assignment. Enablence Technologies Inc. ( ENA TSXV) is operating in the fiber to the home ( FTTH) space as you suggested and the company just raised close to $29M in an offering priced at $0.40.   The advance from $0.40 to $0.62 since February 4  has been very generous for investors who bought into the offering. Lets see if ENA has brought enough cable to extend the uptrend.

ENA

The three year chart tells the tale of  a tech high flier that had the wind taken out of its sails by the economic crisis in 2008 and has been able to get off the lows but not without volatility. Resistance since May of 2009 has come in at $0.65 and three attempts to get through have failed.

In addition the trading pattern that began in December of 2009 is a very good example of a pennant formation. A big flag poll, with a flag forming into the middle of Februaryand then a breakout back to the upside. A pennant formation is considered a continuation pattern suggesting that the stock will get back into an uptrend after the stock has consolidated.

 

 

 

ena2

The six month chart provides a view of the recent trading action in the stock. The RSI has been indicating an overbought situation for the last month and it now looks like some of the enthusiasm for the shares is waining. The MACD is also turning lower suggesting a shift in momentum to the downside.

 

ENA has had success selling their fiber to the home solutions to a number of telecom carriers who want to maximize their ability to offer voice, video, and data services to business and residential customers at a competitive price.

At this point it appears that ENA has gotten ahead of itself and needs to consolidate its recent advance before it can break above resistance at $0.65.

Happy Capitalism!

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