Crescent Point Energy not about to reverse the downtrend

Jul 17th, 2015 – 1 Comment

The six-month chart is bereft of any hints that we can expect an upside move in the near term.


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Lou Schizas is an equities analyst, investor, entrepreneur, professor and television and radio personality – and a true believer in the happiness-inspiring powers of capitalism.


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Hi Lou

Not sure what to do I bought into CPG at 29.75 about a month ago. Now that it has dropped in price should I buy in again at current price and then dump the higher price shares when they get back up to say 30 or move onto something else. Your comments please.

I am new to trading and fairly conservative. My original thoughts were to hold on for about a year then sell. My first attraction to the stock was the dividend!

Thanks
Debbie

 

Hey Debbie,

Thanks for the assignment. This will be the sixth time since 2010 that I check out the charts for Crescent Point Energy Corp. (CPG TSX). The last was on May 25, 2015 when the shares were trading for $30.05 and offered a dividend yield of 9.11%. Garry had tasked me with a long term assignment to examine large cap companies in the major subindices of the TSX.

What the research surfaced was that a downtrend had been in place since June of 2014 and and that a death cross had formed in October of the same year. It was noted that the stock was struggling to stay above the 50-day moving average and that it was meeting resistance near $32.00. The Organization of Petroleum Exporting Countries (OPEC) was scheduled to meet on June 05, 2015 setting quotas for its members which would influence the price of oil.

There were no clear indications of how CPG would trend and it was advised to embrace patience as a virtue. Retrospectively that was the right call. Another study of the charts will help identify how best to manage this investment.

 

 

 

CPG

The three- year chart characterizes a stock that has caused investors pain and suffering for just over a year as oil prices have been kicked it the curb. What can’t be ignored is the established downtrend and the death cross that are still the dominate patterns. The gap down on May 27, 2015 followed CPG’s announcement that it was in an all stock deal worth $1.53 billion to acquire Legacy Oil and Gas Inc. (LEG TSX).

The evidence at hand does not support a buy decision at this time. The MACD and the RSI continue to demonstrate that sellers are still in control of the market.

 

 

 

 

 

 

 

CPG2

The six-month chart is bereft of any hints that we can expect an upside move in the near term. From the research conducted I would not recommend adding to your position at this time. The dividend yield at these prices is 12.11% which may seem attractive but not at the cost of eroded capital.

Next time I will review the charts for Labrador Iron Ore Royalty Corp. (LIF TSX) for Guy.

 

Make it a profitable day and happy capitalism!

 

 

 

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