This company is in power generation (the green way) gas, pipelines and a whole host of other things. We would be a seller as the p/e is somewhere in Alice in Wonderland levels, but we do acknowledge that the stock could easily add another dollar or two while it attempts to reach the upper trend line. There is no correlation with energy prices whatsoever, nor is there anything wrong with the stock. It is simple too good to be true.
On Nov. 11 this was a clear sell. It is now down almost $30 and has as much again to go before it hits the normal support level of this wedge, at $100
In July when the stock was about $19 we predicted a drop to about $8 based on a simple EW pattern, the “flat”. Here it is again;
Relative to the stylized flat drawn in the chart, the drop is a little slow but has already gotten close to $11. Notice that there is no correlation between the price of oil or gas and the stock price. Last time it reported production up 10%, cash-flow up 29%,earnings from operations up 38% and net income up 48%. So why is the stock down 50%? The waves??
In our last blog, back in February , we suggested that this stock was a sell even if it had not yet reached its full potential. It has now IMO and therefore we would definitely sell at this time (we were buyers at $31). The simple reason is the clarity of the chart which has a similar ending as EMP.A (Sobey’s). Here are the charts;
The argument is simple, as always. Looking at the Bigchart it is clear that for the past 20 or so years this stock has only traded above it’s present price for maybe 3/4 months at best. That obviously does not preclude it from doing so in the future, but clearly if you are a buy low/ sell high investor, you start of with 3 strikes against you. The stock is sort of triple topping and Head & Shoulder types might see something there. From an EW perspective the dead giveaway is the diagonal (always) 5th wave that the stock has been tracing out since August. This is an exhaustion pattern that quickly retraces back at least to it’s base, and probable much further.