What happened to Keyera last week? Is this a blip or a change in fortunes?
The last time I ran the charts for Keyera Corp. was on Oct. 12, 2011 on an assignment from Andrew. The shares were trading for $44.03 at that time and it was advised that the shares satisfied his twin objectives of income and growth. In addition it was mentioned that no matter how attractive a chart, it was incumbent on investors to review their holdings on a daily basis to avoid the big slap upside the wig that comes when you are not paying attention.
KEY has gone from a solid uptrend surfer to a bit of a concern in just four months. Another look under the hood is warranted and will help answer your question.
Since my last post in October the stock has given back all of the gains it racked up as it ran to the 52-week high of $51.60 on Jan. 5, 2012. Unfortunately the three-year chart depicts shares that have breached the uptrend line as well as the 50- and 200-day moving averages all of which were providing support. The RSI and MACD also generated sell signals as we came into January of 2012. Finally the selling that came in over the last week had to be related to the financing that was priced at $43.00. It is hard to get investors to hold when new shares are issued below the market.
The RSI on the six-month chart indicates how overbought the shares were from mid-December to early January. The MACD also generated a sell signal at the same time. Currently, the indicators are not suggesting that the selling has abated. What is also noticeable on the chart is that the stock has not been able to hold support at any point in the decline. KEY has to catch a bounce off of $43.00 to prevent a further round of selling.
At this point with the evidence in hand I would be a seller for the simple reason that the uptrend has reversed at least for the time being, and preservation of capital is not an option. It is required.
Make it a profitable day and happy capitalism!
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