Pengrowth Energy Corp. should be traded in its range

Jun 12th, 2015 – Comment

The MACD and the RSI are just beginning to turn higher as the shares bounce off of support.


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PGF LOGO

Hi Lou,

What’s your take on Pengrowth now? Latest announcement: dividends cut in half. Low share price. Sell?

Cheers,
CJ

 

Hey CJ,

Thanks for the assignment. This will be the seventh time since 2012 that I investigate the situation surrounding Pengrowth Energy Corp. (PGF TSX). The last time was on April 14, 2014 on a request from Scott. The shares were trading for $6.81 and Scott wanted my take on the stock. The research undertaken on his behalf indicated that the shares were coming off a 52-week high of $7.60 and had breached its uptrend line and the 50-day moving average.

The shares caught a bounce off of $6.60 and were then meeting resistance along the 50-day moving average. It was advised that investors should wait for better visibility as to the trend that might evolve. There was a short move back towards the 52-week high but it wasn’t long lived and by June 2014 the top was in.

Another probe of the patterns on the charts will help you decide how to proceed with your investment.

 

PGF

The three- year chart depicts the double top that formed in June of 2014 informing investors that the uptrend that started in February of 2013 was coming to an end. By September of 2014 PGF had breached support along the 50 and 200-day moving averages as well as $6.00. In addition we had a death cross surface by the end of the month pointing to continued selling pressure which took the shares down to $4.00 by October. In November the stock got battered, beaten, and burned by the OPEC decision to maintain production levels putting more pressure on the price of oil.

Also worth pointing out are the sell signals generated by the MACD and the RSI in June of 2014 and then the buy signals that came in December of 2014 as the shares hit their 52-week low of $2.76.

 

 

PGF2The six-month chart provides a close up of the range bound trading pattern that has dominated 2015. Support at the lower end of the range comes in near $3.10 and resistance appears near $4.20. The MACD and the RSI are just beginning to turn higher as the shares bounce off of support.

You are wondering about throwing in the towel. Be advised that  you have time before year end to make that decision. Clearly the last year has been challenging given the war for global market share being conducted by OPEC using excess supply as their weapon of choice. At current levels PGF is at its historical low. You should consider trading the stock in its range until there is better clarity as to direction.

 

Next time I will explore the potential of Genworth MI Canada Inc. (MIC TSX) for Frances.

 

Make it a profitable day and happy capitalism!

Categories: Energy
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