I have often mentioned the head and shoulders formation.

I have often mentioned the head and shoulders formation. Although penny stocks like the one above carry extra risk, they do tend to follow the patterns I have discussed or illustrated in my various columns.

In the chart above, I have shown a simple breakout in the main chart. That really interested me, so I started digging. According to the Central Alberta Well Services  (CWC) website, the company provides “drilling rigs, service rigs, and coil tubing to established oil and gas producers in the Western Canadian Sedimentary Basin.” That is talking my language, since in one capacity or another I spent my working career in Canada’s oil industry. These services are necessary for the completion of newly drilled wells, and for the maintenance of wells already producing.

And as I have mentioned in other columns, Canada’s energy sector hit its nadir at the beginning of this year, when West Texas Intermediate oil touched US$26 per barrel. Today, it closed at US$52.

To follow up on CWC, I drew a five-year chart, above. As you can see, last July it formed the left shoulder of a head-and-shoulders pattern, and it completed that pattern in the fall. The red and green support/resistance line shows how the breakout, which occurred today.

After drawing this pattern and completing my studies, I went shopping for the stock. Perhaps you will too.