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A train enters a depot along the Burlington Northern Santa Fe rail line outside of Williston, N.D., on March 12, 2013. The Bakken oil formation has made North Dakota the second-largest oil-producing U.S. state after Texas. (SHANNON STAPLETON/REUTERS)
A train enters a depot along the Burlington Northern Santa Fe rail line outside of Williston, N.D., on March 12, 2013. The Bakken oil formation has made North Dakota the second-largest oil-producing U.S. state after Texas. (SHANNON STAPLETON/REUTERS)

Schizas’ Mailbag

Sellers are taking profits on this energy stock Add to ...

Hi Lou,

Can you review PRY please?

Thank you,

Ron

Hey Ron,

Thanks for the assignment.

Pinecrest Energy Inc. seems to have all the right elements to drive shareholder value. It has a large land base in the Bakken oil play in Saskatchewan, and its production is skewed to light oil. However the last year and a half has been brutal for shareholders. The shares traded near $3.30 in February of 2012 but have given up most of that value. There has been a move off the 52-week low of $0.375 that started in September 2013 which is probably what motivated your e-mail.

A study of the charts will better inform my thoughts on PRY.

The three-year chart offers a number of interesting patterns worth examining. The double top in February of 2012, when the shares hit the highs near $3.30, signalled that the good times were at an end and that investors needed to revise their expectations. The death cross that surfaced in May of 2012, when the stock was trading for $2.25, provided another incentive to get off the field of play and preserve capital.

As we came into September of 2013 the MACD and the RSI both signalled that a trade was setting up as PRY hit the rock bottom at $0.375 and caught a bounce.

The six-month chart depicts the buy signals generated by the momentum indicators in September which took the shares to a high of $0.61 on Sept. 26, 2013. What is also evident is the resistance that comes in at $0.60 and the subsequent retest of support along the 50-day moving average. At this point the MACD and RSI are turning lower indicating that traders who caught the ride off the lows have been harvesting profits and may continue to do so.

If you are thinking of buying it would be prudent to ensure that support along the 50-day moving average holds.

Make it a profitable day and happy capitalism!

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

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