This construction stock is running out of steam

Hi Lou,

Could I get your thoughts on Macro Enterprises?

Where do you see this pipeline construction and maintenance company going?

Thanks,

Pete

Hey Pete,

Thanks for the assignment.

This will be the second time that I examine the case for Macro Enterprises Inc. The first undertaking was on your behalf on March 8, 2013. The shares were trading for $2.10 and you wanted to know if the advance would continue. The research identified that the RSI was signalling an overbought situation suggesting that the stock was running out of buyers. We did get a pullback to $1.70 by late April which was followed by a strong bounce in May. It was also advised not to shoot the running horse but to watch the trend as we came into the May reporting season for the company.

Another review of the charts will provide further evidence that you can use to determine how best to proceed with this investment.

The three-year chart illustrates the pullback in March into April followed by the move higher ahead of the release of first-quarter results on May 22. Worth noting are the buy signals generated by the RSI and the MACD in early May.

The six-month chart provides a close-up of the MACD and the RSI which generated sell signals in late March and buy signals in early May. Currently it appears that the momentum indicators are signalling that investors should expect more selling in the near term. It would be wise to consider taking some profits off the table and waiting for a better indication of trend.

MCR has been generous but trees don't grow to the sky.

Make it a profitable day and happy capitalism!

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