E Tech Talk: Canadian Natural Resources

In my most recent post, I commented on Altura Energy, which continues to perform well. I also mentioned Canadian Natural Resources (CNQ.TO)(CNQ), which I recently bought and which deserves further comment.

Let’s begin with the weekly chart above, in which I have drawn an inverted head and shoulders – often the most powerful pattern in the technician’s toolbox. In this case my drawing looks like a happy face, which under the circumstances is altogether appropriate. To further explain, the dotted blue line shows the neckline, while the solid red and green line illustrates support and resistance. Of particular interest to me is that, even when oil prices were higher than US$100 per barrel (2014 and earlier) this stock was only a bit higher than it is today, when prices are hovering around US$50.

That’s the deep background; the following chart brings us up to the present. There is a lot of noise here, so you have to see it in the context of the bigger picture – the five-year chart above.

The two visible lines here – red-green support/resistance, dotted blue neckline – correspond to the same indicators in the five-year chart above.

What is quite interesting about this chart is that the cross-over of the blue 50-day moving average and of the red 200-day moving average shows an extremely unusual pattern: the bearish death cross followed only weeks later by the bullish golden cross – both marked. The best thing, though, is that the golden cross is still in the ascendant. Put another way, for this stock the bulls have started running again.

Why? Oil prices hit a low of US$37 last August, but continue to dither in the $50 range – ‘though I have circled a recent buy signal in the PPO panel. Today, CNQ and other large oil sands producers are posting earnings that reflect lower costs and those higher prices. In addition, the company recently cut a US$7.25-billion deal with Shell, purchasing core oil sands assets that CNRL knows well. That’s an easy idea for investors to understand.

Disclaimer: The analysis and ideas presented here should never be seen as a buy or sell recommendation. I am an active trader, but I discuss stocks for informational purposes only. By reading my columns, you need to understand that I am not a registered analyst or broker. Research stocks yourself before you buy or sell, please.

...more
How did you like this article? Let us know so we can better customize your reading experience. Users' ratings are only visible to themselves.

Comments

Leave a comment to automatically be entered into our contest to win a free iPad Pro.