Suncor Energy still building a base

Nov 19th, 2010 – 1 Comment

What is clear is that SU is building a nice base and there are many things worse than base building for a stock.


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Lou Schizas is an equities analyst, investor, entrepreneur, professor and television and radio personality – and a true believer in the happiness-inspiring powers of capitalism.


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Hi Lou,

Is Suncor @ $35 a good investment?

Thanks for your expertise.

Ed

 

Hi Ed,

Happy to help where I can. Suncor Energy Inc. ( SU TSX) has been range bound since before April 21 2010 when I last posted on its prospects for Gilles. SU has been in the process of digesting the assets of Petro-Canada that it acquired by way of  the merger announced in March of 2009. Lets examine the charts to get a better sense of potential outcomes.

The three year chart indicates that SU is still trading in range bound pattern moving sideways. It has support at $32.00 and meets resistance at $35.00. It has broken above resistance and below support but more as a test than as a breakthrough or breakdown. What is clear is that SU is building a nice base and there are many things worse than base building for a stock. For the active trader the stock has provided many opportunities to profit within the range.

The six month chart illustrates the range and trading pattern within it. SU has oscillated through the range four times since June with returns of on average 9% with each one way trip to the upside. Not a blowout on their own but in aggregate a healthy payday.

The MACD has proven a good signal generator for changes in momentum and should be on your radar if you are going to take a position in SU.

To answer your question is SU a good buy at $35.00? Its probably a better buy at the lower end of the range at $32.00. You also have to decide if you will be a buy and hold investor waiting for a breakout or if you will trade this one for income within the established range. Every investor has to determine their unique investor profile in order to be successful. You can not change who you are so try to avoid stepping out of your comfort and experience zone and making all the mistakes that come from inexperience.

 Also keep in mind that energy stocks enjoy a second period of seasonal strength from February to May, according to the research conducted by seasonality expert Brooke Thackray.

Make it a HUGE weekend and Happy Capitalism!

Categories: Energy
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