Skip to main content

The Globe and Mail

Don’t jump into this oil producer just yet

A drilling rig

Gord Pitts/The Globe and Mail

Hi Lou,

I would appreciate your current view on PetroBakken Energy.

Thanks,

Story continues below advertisement

Paul

Hey Paul,

This will be the eighth time that I conduct an analysis of PetroBakken Energy Ltd since Jan, 3, 2011.

The last time was on March 21, 2012, when the shares were trading for $17.00. Bart was concerned about his investment in the company and wanted to know if he should take profits and if there was strong support for the stock. He was advised that if he felt it was time to sell – that he should go with his gut! When you sell and capture profits it provides a window of clarity where you can make another decision based on the new information that becomes available while you are in cash. If the stock goes down after you have sold you can wait for a new buying opportunity. If it continues to climb you can decide if you want to get back on the ride.

It was also mentioned that reviewing your holdings on a daily basis is required. Things change and you have to react to the signs you find along the trail. Another study of the charts will provide an update on the opportunities and risks associated with this investment.

The three-year chart indicates that by April of 2012 the uptrend that had started in October of 2011 was coming to an end and that it was time to re-evaluate the case for PBN. By mid April of 2012 the 50-day moving average was breached providing another call to action. April was also the month that the RSI and the MACD signalled a shift in momentum towards increased selling pressure.

There was an advance that started off the May 2012 low of $10.79 which ran to a high of $15.01 on September 17. After that, selling came back in, taking the shares to a 52-week low of $8.67 on Jan. 21, 2013.

Story continues below advertisement

The six-month chart provides a close-up of the September top at $15.01 and the consequent decline. The MACD and the RSI both generated sell signals at the same time. By early October the shares breached support along the 50- and 200-day moving averages. Later in the month a death cross surfaced at $12.50. All of these patterns if ignored or not noticed would have produced a destruction of capital.

The RSI and MACD seem to be attempting to turn higher but not in a convincing way. At this point there are too many negatives to suggest putting your capital at risk.

Make it a profitable day and happy capitalism!

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

Report an error
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

Comments

The Globe invites you to share your views. Please stay on topic and be respectful to everyone. For more information on our commenting policies and how our community-based moderation works, please read our Community Guidelines and our Terms and Conditions.

We’ve made some technical updates to our commenting software. If you are experiencing any issues posting comments, simply log out and log back in.

Discussion loading… ✨

Combined Shape Created with Sketch.

Combined Shape Created with Sketch.

Thank you!

You are now subscribed to the newsletter at

You can unsubscribe from this newsletter or Globe promotions at any time by clicking the link at the bottom of the newsletter, or by emailing us at privacy@globeandmail.com.