Crescent Point Energy Corp. trading in a gentle down channel

Nov 14th, 2011 – Comment

With the MACD turning lower it seems that the shares are going to give up some ground and provide a better entry point.


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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,
I miss seeing you on TV with the late Jim O’ Connell. Can you please give me your view  on Crescent Point stock.

Thanks

Joe

 

 

Hey Joe,

Thanks for your kind words and your remembrance of Jim’s all too brief time with us.

I last examined the case for Crescent Point Energy Corp. (CPG TSX) on July 5, 2010 for Ted. At that time the stock was trading for $36.65 and it was advised that the dividend looked to get sweeter on a pull back. The stock did pull back to $32.50 in August of 2010 and the yield moved from 7.5% to 8.54%.

A review of the charts will provide some insight into the potential for CPG as we head into the holiday season.

 

 

The three year chart  illustrates the advance from the lows of August 2010 at $32.50 to the highs of March 2011 as the stock hit  $48.61. However since the spring the shares have been trading in a gentle down channel.

 

 

 

 

The six month chart depicts the support at $37.00 and the resistance at $44.00. This pattern  has provided great trading opportunities for investors who are fleet of foot and can take advantage of the signals generated by the MACD.

Both bounces off of $37.00 in August and October were preceded by an upturn in the MACD. The move from the bottom to  the top at $44.00 generated an 18.9% return on both occasions. Sweet!

 

CPG is on track to exit 2011 with 77,500 barrels of oil equivalent per day of production, 90% of which is oil. The reserve life index is 14.3 years and the proposed exploitation plays identified by the company could double reserves. The shares currently yield 6.60% which once again could get sweeter.

With the MACD  turning lower it seems that the shares are going to give up some ground and  provide a better entry point. From there you can trade it for profits in the down channel or hold it for the yield. It all depends on your individual investor profile.

 

Make it a profitable day and happy capitalism!

 

 

 

 

 

 

Categories: Energy
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