What do you think of Delphi Energy Corp.? Is this an example of letting your winners run?
Thanks for the assignment.
This will be the first time that I examine the details surrounding Delphi Energy Corp. The company reached production of 10,302 barrels of oil equivalent per day (BOE/D) in the first quarter of 2014 comprising 30 per cent oil and natural gas liquids. Management plans to drill seventy self-funded wells over the next five years that will push production to 28,000 BOE/D by 2018. DEE has had success using slickwater hybrid fracking technology and extended reach horizontal drilling to improve production efficiency and economics. The combination of these efforts have been described as “game chargers” in the April 2014 corporate presentation.
An inspection of the charts will help determine how best to manage this running horse.
The three-year chart outlines a rather steep ascent that started in November of 2013. The stock has been operating with a golden cross that formed in May of 2013. DEE finally reversed the downtrend that started in 2010 as it bounced off of $1.00 in March of 2013. The feature worth discussing is that when stocks make a sharp move higher they end up not building support along the way. The uptrend that started last November has barley paused except for a breather in February at $2.50. If DEE were to retreat there would be scant support until the small ledge at $2.50 and below that at $2.25.
The RSI on the six-month chart indicates that the shares were overbought from mid-April to early May but then pulled back to $3.30 where it has been building a small base. What we want to identify at this point is if the stock will be able to break above $3.80. and start a new leg up. If DEE fails to move through $3.80 with conviction it could be setting the stage for the formation of a double top.
This running horse requires daily surveillance to ensure that your hard earned gains don’t slip away in a trend reversal. Your winner has run and run hard. The question is if it will continue to be as generous?
Make it a profitable day and happy capitalism!
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