Canadian Western Bank taking the whip with the west

Aug 7th, 2015 – Comment

There is an established downtrend line, a death cross, and resistance along the moving averages.


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 CWB LOGO

OK Lou…I know you must be the resident expert on CWB having lived and profited in that part of Canada. CWB is under $26, the dividend is not suffering…is this finally a good entry point for CWB?

Steve

 

Hey Steve,

 

Thanks for the assignment. Canadian Western Bank (CWB TSX) is a regional player with most of their branches in British Columbia, and Alberta. They have three locations in Saskatchewan and one in Manitoba. The bank has a commercial side  with exposure to construction, energy, and real estate. The company offers mortgages, consumer loans, and accepts deposits through its retail services.

Clearly you are on a bottom fishing exhibition and there is no question that CWB has been beaten like a rented mule. The trick with bottom fishing is to confirm the bottom and not anticipate it. Exposure to the travails of the energy industry and the resource economies of the western provinces are the central issues for this lender.

An inspection of the charts will provide insight as how you might best proceed.

 

 

CWB

The three-year chart illustrates the trail of tears that investors have endured as the shares retreated from the 52-week high of $43.17 in August of 2014. Make note of the breach of support along the 50 and 200-day moving averages by October of 2014 and the death cross that formed in December of 2014.

The retreat saw the stock touch a 52-week low of $22.55 in late July of 2015 where it caught a bounce to its current range.

 

 

 

 

CWB2

The six-month chart depicts the bounce off the 52-week low and the buy signals generated by the MACD and the RSI as the stock was over sold in July. The move higher has met resistance at $25.50 which brings us to your search for an entry point. At the moment there is sufficient evidence to suggest that there could be more to the up led if CWB can move through $25.50.

However a trade is not a trend reversal. There is an established downtrend line, a death cross, and resistance along the moving averages. If you are tempted by the 3.51% dividend yield keep in mind that as oil goes so goes the economy in western Canada which is where CWB has the majority of its branches and customers. As we say in my house – when your customers are hurting – you hurt worse.

Next time I will inspect the charts for Vermilion Energy  Inc. (VET TSX) for Gerard.

Make it a profitable day and happy capitalism!

 

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