Gran Tierra Energy Inc. selling off with the sector.

Sep 30th, 2011 – Comment

  Hi Lou, Thank you for all your comments on AM640. I would like to have your opinions about Gran Tierra (GTE) This company have some good assets in Colombia, Brazil and Argentina. And the cash balance looks quite good. I bought this stock last April at $6.80, now the price is $4.88 . I would […]


About the Author

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.


Read the author's full profile.


Further Research

Read more about Energy.


 

Hi Lou,

Thank you for all your comments on AM640. I would like to have your opinions about Gran Tierra (GTE)
This company have some good assets in Colombia, Brazil and Argentina. And the cash balance looks quite good.
I bought this stock last April at $6.80, now the price is $4.88 . I would like to know if I should buy more shares to bring down my average.

Thank you again,

Eric

 

Hi Eric,

The last ime I produced an analysis of Gran Tierra Energy Inc.  ( GTE TSX)  wason June 26, 2009 for Ben. At the time the shares were trading for $3.75 and it was noted that there was  golden cross forming and that there was an opportunity for the stock to run to $6.00. Which is how things developed. You asked if you should average down on your investment which I never recommend.

Never chase bad money with good money! When your original analysis is wrong admit your mistake. Start by running the charts again, review the information available in the data stream, and spend some time going over the financial reports. Then ask yourself if you would be a buyer based on the new analysis.

A new analysis of GTE will provide some evidence to support a buy, sell, hold decision.

 

 

 

 

The three year chart tells us all we need to know. The stock has an established downtrend that started March 03,2011 when it hit a 52 week high of  $9.37.  From what you have told me it looks like you left a nice gain on the table.

There is a death cross that surfaced in May of 2011 when the shares were trading at $7.25.  From there its been a steady decline. Also worth noting is that every attempt to move higher has met resistance along the 50 day moving average. In addition the breach of support at $5.25 suggests a retest of support at $4.50.

 

 

The six month chart  is a clear example of a stock in a downtrend with every attempt to move higher met with resistance. The MACD and RSI are not signalling a reversal of the trend.

 

 

 

 

Finally if we look at  the BMO Junior Oil ETF ( ZJO TSX)  as a proxy for the small cap oil sector its obvious that the sector is in a downtrend as well. Its hard to move higher when investors are moving away from the sector.

The best time to buy a stock is when it is going up. With continued selling momentum and no trend reversal indicated now is not the time to invest more into GTE.

 

Make it a profitable day and happy capitalism!

 

 

 

Categories: Energy
Content © Relentless Economics - Charts courtesy Stockcharts.com - Employees Entrance - Optimization Media