Kelso Technologies Inc. in the grips of a downtrend

Nov 16th, 2015 – 1 Comment

Hurting with the oil patch


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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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KLS LOGO

Hi Lou,

What are your thoughts on KLS? I have had an eye on this stock for quite some time and it has been battered. Seems to have good technology and long range perspective is good. Is it time yet?

Gord

 

Hey Gord,

Thanks for the assignment. Kelso Technologies Inc. (KLS TSX)  provides the railway industry with patented technologies that improve worker safety and address environmental issues in the transportation of hazardous materials. The market cap on KLS is only $69.1M and the average daily volume over the last three months is 58,380 shares. With these factors in mind you should make this stock a candidate for the speculative portion of your portfolio.

Unfortunately the bloom has come off this rose which is probably what caught your attention. The shares had been on a run that started in early 2013 when they traded for $0.61 and advanced to a high of near $7.00 in 2014. But that was as good as it got.

A probe of the charts will identify the current conditions that you need to consider if you are going to put your capital at risk.

 

 

 

KLS

The three-year chart  indicates that KLS had been trading sideways from May through December of 2014. In January 2015 everything that could go wrong did go wrong on a technical basis. The shares broke below the 50 and the 200-day moving averages early in the month followed by the formation of a death cross.

The informed investor would have made note of these sell signals to get off the ride and book profits while they were available. What is also evident is that there is an established downtrend in place and consistent resistance along the 50-day moving average.

The final observation is the support near $1.00 where the stock caught a bounce after some aggressive selling in reaction to the release of Q3 results.

 

 

 

 

 

 

 

KLS2

The six-month chart is not providing sufficient evidence to suggest that investors can expect a trend reversal in the short term. The back story on KLS is that the excess profits that railroads enjoyed as they moved higher volumes of oil came to an end with the decline in the price of oil.  The take away is that when your customers hurt, you hurt worse.

 

Next time I will take a run at the charts of Rubicon Minerals Corp. (RMX TSX) for Soheila.

 

Make it a profitable day and happy capitalism!

 

 

 

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