ECA, Encana update.

First the big picture, on the left my June 20, 2011 blog and , on the right today’s chart;

ECA ECA oct 2011

At the time I argued that the stock was not down enough to complete a logical pattern and that it was probable tracing out a triangle that needed one more up move. In retrospect it did not need much of a move before starting the anticipated downward trek. It was a buy above $35 and below $23. Well, we got to $19 and here the stock would have been a buy, but;

eca s oct 2011 eca ss oct 2011

First of all the triangles apex is still at least half a year out, often that coincides with the low but it certainly does not have to. More importantly there is still a 5th wave missing, in fact, quite obviously. Considering that the p/e is at 20 according to one provider and 40 according to another, it is clear that this is not cheap even if it is down 80% from the top. It actually pays a dividend of around 3.75% which helps. For the long term this is clearly a relatively good buy, but a lot more so with a 5th wave.