What are your thoughts on Suncor? I am very intrigued by the current price per share versus its 52-week high. Any thoughts would be very much appreciated!
I last ran the charts for Suncor Energy Inc. on Nov. 19, 2010. The assignment came from Ed and at the time the stock was trading for $33.59. It was suggested that the shares were building a base and that the stock was coming into its period of seasonal strength. In addition it was advised that $32.00 would be a good entry point.
My mentor Steve Kalil taught me that the bigger the base the better the case for an investment. Once a stock breaks out above of its base, and building resistance, there is money to be made. In this case that is exactly what happened. However, this was not buy-and-hold investment but a case of capturing profits when available.
An examination of the charts will help inform the opportunities and risks associated with SU.
The three-year chart tells the tale of a stock that built a base in 2010 and ran from $32.50 in late November to a high of $47.50 by March of 2011. A sweet 46.15 per cent return in four months. But that was all that the shares had to give.
From the March high SU proceeded to shred capital all the way to $23.97. Ouch! That has to hurt! Once again an object lesson in capturing profits when available and not getting married to a story.
The MACD and RSI have both generated some nice buy and sell signals over the last six months. At this moment the RSI is moving into overbought territory and the MACD seems to be flattening out. The big test going forward is resistance along the 200-day moving average. If it gets and stays above that level then there is hope for a further advance.
With energy stocks entering a period of seasonal strength that will run until May, it's a good time to make a move if you are so inclined. Just remember that the trend is your friend till it ends!
Make it a profitable day and happy capitalism!
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