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Watch momentum indicators for this oil patch stock

TransCanada Corp.s Keystone XL pipeline.

Nathan VanderKlippe/The Globe and Mail

Hey Lou,

Just wondering if you like the potential for some upside for Macro Enterprises in the next earnings report? Any insight would be welcomed.


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Hey Dave,

Thanks for the assignment.

This will be the third time that a study of Macro Enterprises Inc. has been undertaken this year. The last time was on June 12, 2013, when the shares were trading for $3.52. Pete wanted to know where I thought the company was going. The research conducted on his behalf indicated that the RSI and the MCD were trending lower suggesting that we could expect more selling in the near future. It was advised to think about taking some profits until there was a better indication as to direction.

The shares did pull back to $3.25 then caught a bounce to $4.00. The MACD and the RSI both generated sell signals by late June and the stock subsequently retested support at $3.25 by mid-July. From there the shares started a new uptrend that took it to $7.25 by mid October.

Another examination of the charts will better inform my thoughts on the potential for this investment.

The three-year chart illustrates an advance that has been very generous to investors over the last year. The gains have not come without challenges but that has to be expected when putting capital at risk. The stock has pulled back from the $7.25 highs hit in October as investors await the release of third-quarter results on Nov. 29, 2013. The retreat from the October high was signalled by the RSI and the MACD. The RSI indicated a move off $5.75 in mid-November while the MACD failed to confirm the move higher.

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The six-month chart provides a close up of the the sell signal generated by the MACD and the RSI in mid-October and the mixed indications ahead of the the release of third-quarter results. At this point we need to see the shares get up back above the 50-day moving average and start a new advance with better than average volume.

Watch how the stock trades as we approach Nov. 29 and monitor the momentum indicators for signs that buyers are stepping back up to the plate.

Make it a profitable day and happy capitalism!

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