Enerplus Corporation : A downturn could form
March 01, 2013 at 08:37 pm IST
By
Entry price | Target | Stop-loss | Potential |
---|
CA$14.01 |
CA$0 |
CA$14.5 |
+100% |
---|
Indicators argue for a technical correction after the last bullish movement recorded in past sessions.
From a fundamental viewpoint, firstly, we note the high valuation of the company. The PER for the current year is at 19.95x and is expected at 16.24x for next year. With a valuation ratio of 2.82x, the group appears overvalued compared to its business activity.
Technically, the security could run out of steam close to the CAD 14 resistance. Indeed, the stock is moving in an upward trend in the short term but it could know a halt. Moreover, in weekly data the moving averages are in a bearish trend. In this context, the downward movement could improve and it should expect a return to CAD 13. Indicators that show an overbought situation confirm this scenario.
Therefore, the proximity of mid-term resistance suggests a consolidation or a correction phase in the coming sessions. The most offensive will open a short position close to CAD 14 to target a return on the CAD 13 support. It should protect the position with a stop loss set above CAD 14.
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