Ithaca Energy has added 27% since last post

Feb 28th, 2011 – Comment

Given the time of the year and the tensions in North Africa, and the trend that IAE has been following you don’t want to get off this ride until early May


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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,

Can you enlighten me on Ithaca Energy. It has no debt, lot’s of cash and is selling its oil at North Sea prices but the stock has languished for months in the $2.50 range while many other juniors have risen in value.

Thanks,

Hugh

 

Hi Hugh,

I last examined the case for investing in Ithaca Energy Inc.(IAE TSXV) on November 01, 2010 for George. At the time the stock was trading at $2.29 and I suggested that there was more in the tank. The big push for the shares will come as we approach the third quarter of 2011 when they expect to complete the work over on some wells in the Athena Field that is part of the British North Sea oil district. The charts will inform us of developments since November and perhaps lead us to the higher profits.

The three year chart depicts the move since November that has added another 27.07% gain to investors that stayed in the saddle while this running horse continued to chew up turf. Which brings me to your concern about the the direction of the stock.

What my old pal Peter Jahn always said was that the hardest part of managing money was managing client expectations. I suppose you have to ask yourself where did you buy in and are you up, down, or even on the investment.  The other thing to consider is that according to seasonality expert Don Vialoux from timmingthemarket.ca we have justed entered a period of seasonal strength for energy stocks which will run to the beginning of May.

The six month chart indicates that there is now resistance at $3.00 and support along the 50 day moving average. The MACD seems to be signalling a move to the upside after the bounce off of $2.60.

Given the time of the year and the tensions in North Africa, and the trend that IAE has been following you don’t want to get off this ride until early May. After that you should expect a pullback as traders sell into strength.

Happy Capitalism!

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