Not to draw too much fire here but I wanted to touch one one other thing with Suncor. It is up again today to over $89 per share.What started this was my not knowing whether $82 was a good entry point or not, someone then saying it was a terrible entry point and my questioning whether it was really terrible.
The stock is up a little under 10% since this all started last Thursday.
So clearly the chart readers who thought $82 was bad point were wrong!
Well no that is not right. The thing missing from all of this is that oil has moved up a lot in the same week. If oil was at $63 instead of $73 Suncor would be below $82, maybe far below, I don't know.
Citing a past example, perhaps all ten technicians would have said $82 was a bad spot on the chart but does anyone else besides me think that from here Suncor will continue to generally follow the price of oil?
If oil goes to $83 before $63 Suncor will probably go up a lot. If the next $10 is down, not up in crude, I would bet Suncor goes down a lot. This is far from insightful but isn't it possible that given Suncor's relationship, or co-dependence if you prefer, to the commodity might make TA less reliable in this case?
2 comments:
Well I'm no technician, but it seems to me that the reason to own Suncor is the anticipated SEC decision to allow tar sands to be included in reserves. When that happens, I expect Suncor will command a big premium, regardless of the then-current price of oil, because of what it could do to the reserve life index of an acquirer.
The point was not that SU is not a good stock, or that it has some advantages being in a hot sector and being in a politically stable country with a unique asset class (oil sands). The point was risk/reward at 82 AS AN ENTRY POINT. If you look at a chart of $WTIC it is clearly cyclical and rises and falls with regularity. It also has been following trend lines very closely. Why not enter your preferred stock at the bottom of that channel and not the top? Your downside risk is limited then and the upside plusses are greater. To me, that is good trading.
Post a Comment