Crew Energy has to hold $5.00

Jun 4th, 2012 – Comment

Until there is a reversal of the downtrend I would not be chasing this stock.


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Hey Lou,

Listen to you each morning and afternoon to and from work on AM640. LOVE your realistic view on all things financial!
Any opinions on CREW Energy – CR? It has been under performing the energy sub-index for some time now.

Good time to buy in on the recent sell off ?

Thanks,

Tony

 

Hey Tony,

Thanks for your support and kind words. They are most appreciated! Crew Energy Inc. (CR TSX) has suffered greatly as the price of natural gas has fallen. Management has refocused their exploration efforts towards oil and liquids rich gas but that has not been enough.

CR have disappointed investors over the last two quarters by reporting losses. You have to imagine its hard to make money when half of your production is natural gas and the price of that commodity struggles to find a bottom. A Portfolio Manager that I respect, Hap Sneddon from CastleMoore Inc., said don’t buy this stock back in April of 2012 when the shares were trading at $7.24. Good call Hap!

A review of the charts will provide additional evidence for you to consider in your search for an entry point.

 

 

The three- year chart indicates that the shares have been in a sell off since February of 2011 when the price topped out at $21.00. There was an advance from October of 2011 to February of 2012 but it was stopped cold when it hit resistance along the 200-day moving average. Since then its been a vertigo inducing ride to current levels. Worth noting is the double top that surfaced in February of 2012 informing investors in the know that it was time to take profits.

 

 

 

The six month chart provides further proof that capital preservation is not a trivial pursuit. The RSI indicates that the stock has been oversold for most of the last three months which is generally evaluated as a sign of weakness.

In addition the downtrend line is still providing resistance and there is the death cross, which surfaced in April, that should not be ignored. The shares seem to be trying to hold support along $5.00 but if they can’t they may have to retest $3.50. Until there is a reversal of the downtrend I would not be chasing this stock.

What CR and the rest of the North American energy sector needs is a recovery in the price of natural gas or a rapid expansion of natural gas liquefaction capacity to float the excess supply to energy hungry markets in Asia.

Make it a profitable day and happy capitalism!

 

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