Husky Energy Inc. has gone from bad to worse

Jan 25th, 2016 – 1 Comment

Don’t expect higher prices for the stock without higher prices for oil.


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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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HSE LOGO

Hi Lou,

Is Husky a buy?

Thanks,

Gill

 

 

 

 

Hey Gill,

 

Thanks for the assignment. This will be the sixth time since 2010 that I investigate the case for Husky Energy Inc. (HSE TSX). The last was on May 20, 2015 for Garry. The shares were trading for $24.58 and had been in a gentle down channel since February of last year. The analysis identified that the the stock was meeting resistance along the 200-day moving average and had been pulling back since April.

It was advised to look for other opportunities in the oil patch and to look for opportunities to trade this one for profits. Finally it was mentioned that HSE would be reporting Q2 in July of 2015 and that it would be prudent to watch as that flex point approached.

As events transpired HSE continued to slide touching a 52-week low of $11.34.

Another run at the charts will help identify if this stock is a buy.

 

 

 

$WTI

The three- year chart for oil is a good place to start the analysis. Crude prices have been in a precipitous decline since July of 2014. Until we see a reversal of this downtrend there is scant hope that the energy sector in Canada and around the world can expect a break. When the price for West Texas Intermediate breached a key support level at $40.00 in December of 2015 it was like throwing a boat anchor to a man struggling in the water.

 

 

 

 

 

HSE

The three-year for HSE illustrates the down channel identified last May. In late October the stock broke below the lower rail of support and started an aggressive retreat in sympathy with the movement in crude. The MACD and the RSI both generated sell signals early in the month alerting the informed investor that they could expect more pain.

What has also developed since the last analysis is resistance forming along the 50-day moving average which will have to be added to your evaluative process.

 

 

HSE2

The six-month chart depicts the bounce off the 52-week low that transpired as the price of crude oil rebounded in the third week of January. As welcome as that has been I am not yet convinced that we can expect the rally in crude to continue. In addition HSE has suspended its dividend and cut its capital budgets. Neither can be considered a ringing endorsement to buy this stock.

If you do decide to bottom fish HSE – watch for resistance at $15.00.

 

 

 

 

 

 

Next time I will examine the charts for MagneGas Corporation (MNGA Nasdaq) on task from Syd.

 

 

 

 

Make it a profitable day and happy capitalism!

 

 

 

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