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Employees of the Canadian company Precision Drilling finish planting a Canadian flag among the Chilean flags planted weeks ago for the miners in Copiapo on Oct. 2, 2010. (STRINGER/CHILE/Luis Hidalgo/Reuters)
Employees of the Canadian company Precision Drilling finish planting a Canadian flag among the Chilean flags planted weeks ago for the miners in Copiapo on Oct. 2, 2010. (STRINGER/CHILE/Luis Hidalgo/Reuters)

Schizas' Mailbag

Western Energy Services: trade this one within its range Add to ...

Hi Lou,

I recently purchased Western Energy after hearing good things about the stock on television.

I understand that the people behind the stock were with Precision Drilling, they have top notch drilling equipment and labour and are operating close to capacity.

It all sounded so good and the recent earnings are healthy. The stock is falling and trades very little volume. Are you familiar with this stock?

More related to this story

Thanks,

Judi





Hi Judi,

The most frequently asked question I field is if I have ever heard of a company and I must honestly say in most cases the answer is no. But that’s a good thing in that I get to open the gift wrapped present you have brought and then I get to spend some time looking at all the moving parts to see if it is a buy, a sell, or a hold.

Members of the management team at Western Energy Services Corp. do have Precision Drilling on their resumes which confirms that they have worked with one of the biggest energy service companies in the world. That’s never a bad thing. Since the 2009 reorganization the company has been raising money and using it to aquire the assets management requires.

A review of the charts will provide a fresh look at your investment.

The three-year chart indicates that the shares of WRG have been trading in a range for most of 2011. There is support at $7 and resistance at $9. I am not sure when you bought your stock but if it was this year you are not in bad shape, depending on your investment horizon and expectations.



The six-month chart illustrates the signals generated by the MACD. In August the MACD indicated that momentum was shifting to the sell side. In addition the RSI was also moving out of overbought territory again suggesting that the advance had come to an end.



In October at the lows of $6 the MACD and RSI signaled a new advance was forming which took the shares to $8.50 before it ran out of steam.

Best advice I have in this case is to trade WRG in the range. The momentum indicators have been generating good entry and exit points to help in your decision making.



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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