Baytex Energy: an attractive BUY ?
  • August 01, 2017 05:27 pm
  • by pierre brodeur

This stock is not for the faint of heart. I cannot predict its volatility in the future but I can examine its return potential over multiple time-frames and should I buy or already own the stock currently ( as Bill does ) , I can always manage the risk around a core position.

Given time constraints, my comments will be short and to the point.

Chart 1: BTE Point and Figure long term chart.

Once upon a time, this was a $47.00 stock. At $3.60, obviously the fundamentals have changed significantly. At best, in a realistic world, the stock could double to $6.00 or triple at $9.00.

Chart 2: BTE Point and Figure shorter term chart.

The stock already gave a Trader’s Double top BUY signal at $3.40. It generated new energy by dropping to $3.00 and following good financial results it shot up to $3.60 a new double top. Any Breakout to $3.70 could be used to build a new position or add to the current one with a feasible target of $4.70

Chart 3: BTE Traditional 6 month chart.

I have shows several indicators which may be useful for timing purposes:

-1- One can clearly see the parabolas which illustrate the cycles for this stock. The current cycle should end at or around the 8th of August which would be an appropriate time for a new higher low. For the more conservative investor, one would like to see a higher high above $3.88 before committing any money on that trade

-2- On the positive side we have a break above the 50 days moving average. It is also trading above the 20 days moving average which is considered by many analyst as a confirmation of a shorter term uptrend. Volume as measured by On balance Volume is now trending up.

-3- On the neutral to negative side, the RSI (7) index (I believe Bill uses a different time-frame than I ) shows a short term overbought condition called Micro Distribution.

Chart 4: BTE Traditional Weekly chart.

The potential reversal of trend described above is supported by a weekly Short term RSI(7) Buy signal.

Chart 5: BTE Traditional Monthly chart.

The potential reversal of trend described above is supported by a monthly Long term RSI(7) Buy signal.

No wonder why Bill is already into the stock. RSI is one of the indicator he follows very closely. That, combined with other indicators are good tools for decision making.

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