A picture is worth a thousand words so hear it is:
We fell back into the pennant formation and now have to breakout of it again. This time, we are finding support at the $ 28.50/shr area which is bullish as it is not normally a place for a stock to turn and head higher.
We should be dropping back to the second line which defines $ 28.20/shr.
This morning, we tested the high at the open, failed, dropped to the support level, confirmed it, and rallied all day. That's what you would want to see. As you can see by this chart, we are about to either test the $ 28.20/shr area if the general market sells off tomorrow, or, we'll break above the 7-dma and start the rally again. If we can make it above the 200-dma, we'll have a great rally on our hands. Let's see NG bottom out and start the next leg up from here. The stock itself is doing very well on heavier volume. GL
Don't know if this was posted.
Smaller Energy Stocks Among the Large Caps Look Doubly Interesting
Disclosure of a legendary investor’s 5.8% stake boosts the stock price of Chesapeake Energy (CHK) by 8% in one day and may have implications for unlocking value in peer stocks including buy recommendations Devon Energy (DVN), EOG Resources (EOG) and Encana (ECA). More than two decades ago, Mr. Icahn’s investment influenced the restructuring of Phillips Petroleum, now part of buy-recommended ConocoPhillips (COP) and USX Corporation, now a separate U.S. Steel (X) and buy-recommended Marathon Oil (MRO).
CHK stock has appreciated only modestly since the chairman sold all his stock at the bottom of the market in October 2008. At a low McDep Ratio and low credibility, CHK is a classic target for a proactive financier. Meanwhile, DVN has already undertaken major actions to unlock value as it has concentrated its resources, retired debt and is repurchasing stock at a rate of about 0.5% a month. Though EOG manages its finances conservatively, an activist investor might advocate taking on some debt to finance stock repurchase. ECA offers attractive long-term value concentrated on a growth resource while high cash flow multiple at today’s low natural gas price may be holding back stock price.
A widening gap in McDep Ratio between small cap and large cap stocks in the past year attests to rising resource value. Logically, those stocks at the smaller end of the large cap spectrum become doubly interesting for both fundamental value and the increasing likelihood of being targeted for acquisition, leveraged buyout, or stimulus from a change agent.
Originally published on December 21, 2010.
Was sure this would hold up around the $29.40 level but
seems like it got sucked in with the broader index.
Nat Gas spot holding strong so this should be well over $30 soon. Still trailing US peers on PPS performance, so that
should adjust soon.