Daylight Energy Ltd. poised to move higher

Aug 12th, 2011 – Comment

Support along $7.50 has held and we have even seen some buying in the last session. A number of factors make a buy at these levels a consideration.


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Hi,

Is it time to buy this stock, as it is down from it’s high.

Helen

 

 

Hi Helen,

 

This will be the fourth time I have conducted an analysis of Daylight Energy. Ltd. (DAY TSX) since the beginning of the year. On March 28, 2011 I suggested that it was probably time to take profits given the signals generated on the charts.

 On July 18, 2011 Pierre wanted to know if it was time to get back in at $9.00. Unfortunately the evidence  was not sufficiently compelling  and it  was advised that investors interested in the company needed to be patient.

Lets go back to the charts and conduct further due diligence.

 

The three year chart tells the tale of a stock that has been in the clutches of aggressive selling since early spring when it topped out at $11.75. Over the last five months investors have seen a 34% pull back from the high.

There does seem to be some support forming in the $7.50 range which warrants further examination.

 

 

 

The six month chart says it all in terms of trend. Down with conviction. The lift in July met resistance along the 200 day moving average which led to more aggressive selling in August.The sell off was a combination of corporate events and the macroeconomic issues that have roiled markets. Q2 results that were released on August 3 were expected to be soft and they were.

Currently the RSI is signaling that the shares are oversold and the MACD is starting to turn up.  Support at $7.50 has held and we have even seen some buying in the last session. A number of factors make a buy at these levels a consideration.

 We are in a period of seasonal strength for energy shares, the dividend at 7.7% is very tempting, the MACD is turning higher, and the shares are oversold. In addition this is company with solid management and better than average prospects.

Recognizing that there is still a significant downtrend to deal with and that there is resistance at $8.50 and $9.00 it looks like the shares are poised to move higher 

 

Make it a profitable day and happy capitalism!

 

 

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