I’m new to your website, recommend by my dad. Could you please tell me your thoughts on lightstream ? I paid $12 a share and years ago and see it’s down to 5.70 today, I’m thinking about buying a lot more.
Thanks in advance ..
Give my thanks to your Dad for the recommendation. This will be the tenth time that I examine the prospects for what is now Lightstream Resources Ltd. (LTS TSX) and its predecessor company Petrobakken Energy. The last time was on January 6, 2014 on a request from Paul. He had read an earlier analysis and wanted an update. The shares were trading for $5.87 and the patterns evident at the time highlighted that the stock was labouring under an established downtrend. In addition there was a death cross that formed in November of 2013 and every attempt to advance was met with resistance along the 50 and 200-day moving averages. It was also noted that the shares had hit a rock bottom at $5.06 by mid December of 2013 where it caught a bounce.
The momentum indicators generated a buy signal at the bottom and it was advised that if the stock could break above resistance at $6.00 it could run to $7.00 without much resistance. LTS could only muster an move up to $6.44 before it pulled back to $5.46 in mid March of 2014.
Another investigation of the charts will help identify if buying more shares at this time is warranted. In general I don’t recommend averaging down but rather encourage seeking new opportunities. Losses are losses and chasing them with new money could lead to new losses.
The three-year chart indicates that after the mid March retreat LTS rallied for a move to a 52-week high of $9.09 by June of 2014. The resistance that was encountered at $9.00 has given rise to an aggressive reversal taking the stock back to the $5.70 range. The MACD and the RSI generated a buy signal at the March lows and a sell signal at the June highs. You would be well served to make use of these tools over the course of your investing career. Another thing to keep in mind is that oil and gas stocks enjoy a period of seasonal strength from January to June which certainly came into effect in 2014.
Over the course of the last nine months management has been selling non core assets in an effort to reposition the balance sheet which some analyst feel is overburdened with debt. The research conducted on your behalf is pointing to less than robust enthusiasm for LTS.
The six-month chart provides a close-up of the sell signal generated by the MACD and the RSI in June. What is also evident was that the stock didn’t drop like a falling piano. There was plenty of time to get off the ride with some trading profits. Make note of the resistance that has formed along the 200-day moving average. Finally the momentum indicators are not signalling that the selling pressure has been relieved.
The evidence at hand does not support a buy at this time. But you should continue to monitor the shares for trading opportunities especially during its period of seasonal strength.
Make it a profitable day and happy capitalism!