Pinetree Capital is not a buy and hold stock

Oct 18th, 2010 – 1 Comment

Hi Lou, What is your opinion on Pinetree Capital limited ? Cheers ! Tony Hi Tony, Thanks for the assignment. I last covered Pinetree Capital Ltd. ( PNP TSX) on July 22, 2009 and since that time the stock has had lots of movement but unfortunately it is now trading at almost the same level […]


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Hi Lou,
What is your opinion on Pinetree Capital limited ?
Cheers !
Tony

Hi Tony,

Thanks for the assignment. I last covered Pinetree Capital Ltd. ( PNP TSX) on July 22, 2009 and since that time the stock has had lots of movement but unfortunately it is now trading at almost the same level as fourteen months ago. That’s not a bad thing it just means we have to treat this one as something other than a buy and hold stock. Lets consult the charts for a better understanding of how to harvest this tree.

The three year chart indicates that PNP broke below support and tested  the $1.00 level. The chart doesn’t suggest a buy and hold strategy which only rewards investors when the stock is moving higher. Trading PNP would have produced some nice returns for investors who took advantage of the moves in 2010.

The chart indicates that through most of the last  two years the stock held support at $1.45 which it breached in June of 2010. The stock pulled back to $1.00 where it found support and caught a bounce. The move higher  has the stock currently  finding resistance in the $2.o0 range. The swing from $2.00 to $1.00  and back is not something that should be ignored.

The six month chart tells the tale of a stock that hit a rock bottom in July of 2010 with the MACD signalling a reversal of the downtrend. The current advance seems to be losing some momentum with the RSI depicting an overbought situation in September and the MACD looking to be turning lower.

What is positive on the chart is that the stock is trading above its 50 and 200 day moving averages but it looks like PNP is taking a breather and could be ready to pull back.

Happy Capitalism!

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