Today I will complete the assignment from Adam who requested an analysis of crude oil and Delphi Energy Corp. (DEE TSX). This will be the second time that I examine the case for DEE. The last was on May 23, 2014 when the shares were trading for $3.47. Brian wanted to know if he should let the his profits run.
The audit identified that the stock had enjoyed a steep ascent as it bounced off of $1.00 in March of 2013. A golden cross surfaced in May of that year foreshadowing a move to high near $4.50 by September of 2014. It was cautioned that when a stock runs up rapidly it often doesn’t build support along the way. When a trend reversal ensues there are few ledges to arrest the decline.
It was advised that DEE demanded vigilant surveillance to avoid surrendering hard earned profits. As events unfolded the retreat from the highs was fast and painful.
Another inspection of the charts will help identify the trend, support, and resistance that are in play.
The three-year chart confirms the rapidly moving downtrend that engulfed the shares after the September 2014 highs. Not to be pedantic,but lets face it ,with crude oil in a full scale retreat it should have come as no surprise that producers would taken a bad beat.
DEE broke support along the 50-day moving average in September of 2014 which was followed by a breach of the 200-day moving average in early October. The formation of a death cross in November of 2014 set the stage for decline that took the stock to a 52-week low of $0.61 in January of 2016.
What is also evident is that since August of 2015 the shares have been trading in a sideways moving range offering trading opportunities for those so inclined.
The six-month chart depicts the many opportunities to trade DEE for profit but with the caution that the moves have been vigorous but short. You have to be on your game to take advantage of the action. Currently there are few signals that we can expect a trend reversal in the near term.
Next time I will work on John’s question about oil stocks.
Make it a profitable day and happy capitalism!