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Charts are just ugly for Just Energy Group

J.P. MOCZULSKI/j.p. moczulski The Globe and Mail

Greetings Lou,

Just Energy Group has dropped 23 per cent in September — from $12.94 to $10.02. Tell me, what's going on ? Thanks.

Best regards, Robert

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Hi Robert,

Just Energy Group Inc. sells natural gas and electricity contracts to households and businesses in parts of Canada and the United States. The stock has been in a steep decline since the spring of this year and shows no signs of reversing the trend. At its current price, its dividend yield is 12.4 per cent. As stated many, many times you do not receive a return of 12.4 per cent without risk. Investors who were buyers when the stock was trading at its highs near $15.00 have taken a serious haircut of 33 per cent on their capital.

A thorough examination of the charts will provide some evidence to assist in any decisions you will need to make.

The three-year chart indicates that the selling that side-swiped you in September actually started in May of 2011. By early July a death cross had formed and the shares proceeded to consistantly melt through support.

The six-month chart depicts the breach of support at $14.00, $13.50, $12.50, and $12.00 in September. The MACD and RSI are not suggesting a reversal of the downtrend. If JE fails to hold onto support at $10.00, it's running to $9.00.

With an established downtrend, repeated failures to hold onto support, a death cross, and no indication that the momentum is about to shift to the buy side, this one looks like its another candidate for a tax loss sale.

The best time to buy a stock is when it is going up. Shares that are in the midst of a selling trend and losing value are not a candidate for a buy. At some point JE will reverse this trend but the journey to higher valuations will be a difficult one.

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Make it a profitable day and happy capitalism!

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About the Author
Lou Schizas

Lou Schizas is an equities analyst, investor, entrepreneur, professor and television and radio personality - and a true believer in the happiness-inspiring powers of capitalism. More

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