Xtreme Drilling and Coil Services has more to give

Sep 20th, 2013 – Comment

I don’t expect a trend reversal in the near term but you should expect re-tests of support through this uptrend.


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XDC LOGO

Hi Lou,

I have been accumulating shares of Xtreme Drilling as it came off of the lows. Your thoughts please.

 

Thanks,

Wayne

 

Hey Wayne,

Thanks for the assignment. You made a great call on Xtreme Drilling and Coil services (XDC TSX). The stock had been so beaten down that it started to get attention from investors who could see the opportunity with this driller. The company operates a fleet drill rigs designed to service North American unconventional shale plays. In addition the coiled tubing services can be used in deep horizontal resource development.

An examination of the charts will inform my thoughts on the opportunities and risks associated with XDC.

 

XDC

The three-year chart depicts the move off the 52-week low of $0.96 on October 1, 2012. The golden cross that surfaced in February indicated that there was more to come. The advance has met resistance at $4.00 which is the next question to be answered. If XDC can break above $4.00 there is little holding it back from $5.50.

Kudos to Shirley Won who wrote an article that was published in the Globe and Mail on April 26, 2013 which got it 100% right and set up a nice gain for investors. Here’s a link to the piece :

http://www.theglobeandmail.com/globe-investor/inside-the-market/stock-to-watch-xtreme-drillings-turnaround-has-legs/article11558530/

 

 

 

XDC2

The six-month chart illustrates the trading opportunities that were available to investors who followed the charts. The MACD and the RSI generated a series of signals, a sell in May, a buy in June, and a sell in August. Currently the momentum indicators are turning lower. What is also evident is that the uptrend line has not been breached and investors have been buying when the stock has pulled back.

A couple of things to consider. Average daily volume over the last three months is 58,660 shares. The stock has traded above average volume on 12 of the last 30 sessions. Liquidity needs to be on the radar when evaluating your investments.  With a market capitalization of $294 million there is an extra level of risk that also needs to be weighed.

I don’t expect a trend reversal in the near term but you should expect re-tests of support through this uptrend. Don’t shoot this running horse but watch it very closely to preserve your gains.

Make it a profitable day and happy capitalism!

 

 

 

 

 

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