ESSENTIAL ENERGY SERVICES LTD (ESN.TO): Breakout, 6%+ pop midday

Yesterday post on the high volume signal was apparently was dead on.  Check it out.

This breakout is by all measures over extended so a pull back tomorrow could happen but this should be considered confirmation of a trend change until proven guilty by a break below the 1.90-1.95 range.
This stock has just completed an acquisition of Technicoil which has led to a larger service offerings and larger client base. 

ESSENTIAL ENERGY SERVICES LTD (ESN.TO) Review: High volume June 29th, 2011

Resistance as expected on that trendline as well as the 200 MA.   However, today saw strong buying volume with oil surging.  Everything will depend on the Greek vote tomorrow, so expect volatility on open as I believe the vote will be held around 6:00am EST

S&P500 Update: New short term uptrend established and Wednesday's Greek Austerity Vote

June 28th saw a pop from the markets at the beginning of trading.  This jump was sustained into close.  Interesting enough, using Andrew's Pitchfork, from the lowest low to the high point and the low of the correction, we can see a potential uptrend being established.  This lower channel is where support was found in the morning setting off a rally which ended in the middle of the lower channel.  Watch for retests of this channel for clues to see if a change of trend is actually occurring.

The major caveat is systematic risk.  There is a lot of problems showing up again and the governments around the world are attempting to find answers for them.  Most notable is the Greek austerity vote tomorrow.  This vote will be a sign of things to come, as a rejection of this vote means a renegotiation with IMF and EU on aid packages.  This would bring the markets under pressure as sovereign default becomes a plausible outcome.  In addition, Greece would likely have to vote for a new government one which aligns with the interest of the citizens. 

A summery of the Greek Austerity measures that are on the table can be found at the BBC in this article

The measures are broad based touching taxation, public sector cuts, spending cuts, cutting benefits, and privatization.
A few examples:
"A solidarity levy of between 1% and 5% of income will be levied on households to raise 1.38bn euros."
"The tax-free threshold for income tax will be lowered from 12,000 to 8,000 euros."
"The VAT rate for restaurants and bars will rise to 23% from 13%."
"Nominal public sector wages will be cut by 15%."
"Wages of employees of state-owned enterprises will be cut by 30% and there will be a cap on wages and bonuses."
"Education spending will be cut by closing or merging 1,976 schools."
"The statutory retirement age will be raised to 65, 40 years of work will be needed for a full pension and benefits will be linked more closely to lifetime contributions."

I always wonder about the reaction to such measures if they were instituted in Canada or the US.  More interesting would be the government reaction to protests to these measures.

ENW.VN stock analysis Update: Likely Bottom found in ENW.VN

The bottom of this downtrend was expected to occur based on previous analysis located here: ENW.VN -> EnWave, stock finding support, Signs deal will Kellogg Company

Today the price found support at the Bollinger band resulting in a long tail.   There was sizable volume today compared the the previous 9 days.

The picture becomes clearer when we look at the 15 minute chart.

Two major volume spikes  in the middle and at the end of the day. The bottom appears to be the 1.70 level. It appears for now at least that a higher weekly close is likely in Enwave (enw.vn). 

A possible explanation on what happened today in Enwave can been seen from the Wikipedia entry on Market Trends, where they explain market capitulation.

Market capitulation (from Wikipedia)

Market capitulation refers to the threshold reached after a severe fall in the market, when large numbers of investors can no longer tolerate the financial losses incurred.^[13] These investors then capitulate (give up) and sell in panic, or find that their pre-set sell stops have been triggered, thereby automatically liquidating their holdings in a given stock. This may trigger a further decline in the stock's price, if not already anticipated by the market. Margin calls and mutual fund and hedge fund redemptions significantly contribute to capitulations.^{[citation needed]}

The contrarians consider a capitulation a sign of a possible bottom in prices. This is because almost everyone who wanted (or was forced) to sell stock has already done so, leaving the buyers in the market, and they are expected to drive the prices up.
The peak in volume may precede an actual bottom.

 The key is the few lines.
Firstly, Confirms that capitulation is considered by some to be a bottoming event.

Enwave (ENW.V) experienced capitulation in the middle of the day when prices broke 1.80.  Large sell volume was followed by strong buy volume around 1.70.   Then by the end of the day, continued buying potentially confirms the reversal. 

ENW.VN -> EnWave, stock finding support, Signs deal will Kellogg Company

 Looks as if the price action is finding support of the original top channel of the Andrew's pitchfork.    If this holds Enwave stock is likely to move quickly regaining losses suffered over the last couple months.

A closer look with the MACD showing a rounding out, and looking to challenge the the 0.00 level.   Support also is from the 200 daily MA that is under the price currently.

In addition to the technical side, the company fundamentals are strengthening by the day.  Recently Enwave signed a R&D agreement with Kellogg company.  This is another milestone in the company's quest for additional partnerships with global leaders. 

EnWave website

  Explanation of EnWave Technology

ESSENTIAL ENERGY SERVICES LTD (ESN.TO) Follow up on the acquisition of Technicoil (TEC.TO)

 Essential Energy Services Ltd. (ESN.TO)


A few weeks after the acquisition and ESN has emerged with a general consensus that the addition of Technicoil will set Essential on a strong path of profitability.  The oil industry has heated up over the last 6 -8 months, with oil prices reaching around $115 at the end of April.  Many new drilling companies, production companies, and exploration companies realize that $100 oil is likely to be the new norm.  With this knowledge capital expenditures to improve efficiency, safety, environmental controls will be on every CEO mind.  The mid to small cap oil companies that are using the latest in equipment will not only realize immediate operational efficiency gains but also lasting goodwill in the form of adhering to a strict environmental standard.   This environmental aspect of the oil industry is even more important in the Canadian Oil Sands in Alberta. 

The EuroZone has been active it seeking cleaner energy, with targets set on the oil sands in Canada.  The companies that have stellar performance in the triple bottom line (financial, social, environmental) will secure drilling and production rights much easier as environmental concerns will be part of their culture.

Essential Energy Services is likely to capitalize on this inflow of "new" money as investment continues to pour into the energy and other commodities space.

From the latest move up, from 0.75 to 2.50, the price has come down 38.2% touching the 50 week moving average.

The downward sloping trendline once broken will likely start forming a base for another leg up as long as Oil prices remain stable.  Earnings will be what makes a stock like this move, as actual sales will outstrip expectations with money flowing into this industry.   I expect the 200 MA to hold, however, if ESN breaks to a new low expect slight further downside.


 

CIENA Update: Q3 Guidance cut, below analyst expectations

I have covered Ciena stock for the past few months, and have warned that something doesn't add up. In my recent more comprehensive review of this stock I warned of a roll over.  Also a orange trend line that was something to watch in the upcoming months.
With a June 8th, announcement that was not unexpected, Q3 guidance was cut to bring the stock back to a reasonable valuation.   Not so surprising is the gap over the orange trend line that has been extended.

Also not surprising is the sell off took the price back down to the May 2010 high around the $19 range. 
When the quarterly report comes out I will look deeper into their excessive levels of debt and future demand prospects.