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EnCana Corp. looks to be setting up a trade
schizas’s mailbag
Lou Schizas
Special to The Globe and Mail

This article was published more than 8 years ago. Some information may no longer be current.

Hello Lou,

Enjoy the John Oakley show and the advice you give. I have been reading that EnCana and American Airlines are 2 stocks poised to make some big gains over the next 12-16 months.

What are your thoughts?

Scott

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Hey Scott,

Thanks for listening, the assignment, and your kind words. All are greatly appreciated. I will inspect the charts for EnCana Corp. (ECA-T) today and American Airlines Group Inc. (AALQ) next time. My analysis will not cover a 12- 18 month period.

This will be the fifth time since 2012 that I examine the case for ECA. The last time was in Aug. 26 for Boris. The shares were trading for $8 and Boris wanted my opinion. The research indicated that there was an established down, a death cross that surfaced in November of 2014, and the inability to hold support at various price levels. The stock got a lift on the announcement that the company had sold some assets to pay down debt but there were no indications that we could expect a trend reversal. The shares ran to resistance along the 50-day moving average near $10 but then pulled back.

Another audit of the charts will help identify if ECA has enough gas in the tank to start another leg up.

Desktop users click on image to enlarge

The three-year chart continues to exhibit an established downtrend, and a death cross. The MACD and the RSI both generated sell signals in May when the stock was trading close to $17.00. The momentum indicators signalled a buy in late August as ECA continued to track higher after the announcement of the asset sales. The leg up lasted for three weeks, generating a 25-per-cent return for investors who caught the ride.

Desktop users click on image to enlarge

The six-month chart depicts a stock that needs to break above resistance at $10.00 if it is going to extend the move higher. The next level of resistance is at $11.00 and after that $12.00. The MACD and the RSI are turning higher, suggesting that a trade is setting up.

However there are still no indications that we can expect a trend reversal in the near term.

Next time I will run the charts of American Airlines Group Inc. (AA-Q)

Make it a profitable day and happy capitalism!