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A pump jack draws oil from the ground near a hydraulic fracturing operation near Bowden, Alta., Tuesday, Feb. 14, 2012. (Jeff McIntosh for The Globe and Mail/Jeff McIntosh for The Globe and Mail)
A pump jack draws oil from the ground near a hydraulic fracturing operation near Bowden, Alta., Tuesday, Feb. 14, 2012. (Jeff McIntosh for The Globe and Mail/Jeff McIntosh for The Globe and Mail)

Schizas' Mailbag

Open Range Energy Corp. will have to test $1.00 Add to ...

Lou,

Just returned from a month long sojourn in Lakeland Florida to find my chunk of shares in Open Range had gone down.

Could you please pass an opinion on this junior? Should I sell now and buy back later, or is it too late for that?

Thanks so much,

John in Woodstock, Ontario



Hey John,

Sounds like the sun and surf treated you well but that Open Range Energy Corp. kicked some sand in your face!

More related to this story

This will be the third time that I review the risks and opportunities associated with the company. The first time was on July 29, 2011 for Joe. It was advised that a good entry point would be at $5.50 and the Poseidon operating unit was the stick that was stirring the drink. When Poseidon was spun out to shareholders in November the value of the investment was in excess of $13.00.

The last time I ran the charts was on Jan. 11, 2012 for Nadeem. The shares were trading for $1.45 as a pure play exploration and production company. It was observed that the stock was under selling pressure and that it would be prudent to hold off on buying until the downtrend reversed. Retrospectively that was the right call.

Another review of the charts for ONR will provide greater insight as to the potential for your investment.

The three -year chart traces the outline of a stock that had investors excited on the technology within the company but lost interest in the shares when they could buy the pure play in the Poseidon water handling unit. The breach of support at $1.20 suggests that we are likely to test support at $1.00.The MACD has produced accurate buy and sell signals over the last nine months indicating that if it is not on your daily watch list – it should be!



The six-month chart confirms the selling pressure that has gripped the shares since the spin out of Poseidon. The MACD and RSI are not indicating that the trend is about to shift and there is a death cross that is forming, none of which signal a buy or a hold for me. At this point the best-case scenario is a bounce off of $1.00 but that is not a guarantee.

One last thing, if you are going to go off the grid for a while think about throwing to cash while you are away. That way you can make another decision when you get back as opposed to letting the market decide for you. If you ignore your money it will go away.

Make it a profitable day and happy capitalism!

Have your own question for Lou? Send it in to lschizas@globeandmail.com.

Visit his website

 
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