Exco Technologies Limited setting up a trade

Dec 19th, 2014 – Comment

There could be more upside to the bounce we saw on December 18, 2014 but keep in mind the resistance at $12.00.


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Hey Lou.

You recently thought XTC was overbought. Is that still the case? I am looking for companies who would benefit from lower oil. They have a small dividend, but possible good growth curve.

Thanks,
Michael

 

Hey Michael,

Thanks for the assignment. This will be the second time that I inspect the details associated with Exco Technologies Limited (XTC TSX). The last time was on July 28, 2014 on a request from John. He wanted an opinion and the research indicated that the stock was indeed overbought as it hit its 52-week high of $12.60 in June. The shares pulled back to $10.00 by mid July and were meeting resistance at $11.50 by the end of the month. It was advised that the best case scenario for XTC would be to build a base to support a new advance.

Unfortunately the shares couldn’t break above resistance at $11.50 and by late August they breached the 50-day moving average and then the 200-day moving average by early October 2014. By mid October the MACD and the RSI generated buy signals which gave rise to a leg up off support at $9.00 to $12.00 by late November.

Once again the share got overbought and began a pullback to current levels.

Another scout of the charts will help determine if XTC is on the verge of starting another leg up.

 

XTC

The three-year chart illustrates the resistance that has formed near $12.00. XTC has knocked on that level twice but hasn’t been able to move through to higher highs. At the moment the RSI and the MACD are not providing a strong indication that we can expect a run to the upside. Worth mentioning is the test of support along the 200-day moving average.

 

 

 

 

 

 

XTC2

The six-month chart provides a close up of the sell signal generated by the MACD and the RSI in late November as the stock failed to break above $12.00. XTC bounced off support along the 200-day moving average for a sweet one day gain of 8.01%. The momentum indicators are pointing just slightly higher off the one day surge.

The next flex point for the stock will be when they report their quarterly results in January. It appears that a trade is setting up that could add more upside to the bounce we saw on December 18, 2014 but keep in mind the resistance at $12.00. Its going to take a good dose of positive news to breakthrough resistance to a new sustained leg up.

In an expanding economy companies like XTC benefit as the demand for their services increase. Sustained lower oil prices will leave consumers and businesses with more disposable income. The operative word is sustained. The longer energy prices stay at reduced levels the more likely that they will contribute to economic expansion.

Make it a profitable day and happy capitalism!

 

 

 

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