Monday, August 11, 2008
I let Tobinator SCOOP me, well not really
but I made sure his Quarterly Newsletter made it out in e-mail before I publish this article I wrote for his Newsletter. It should contain some of the elements we have covered here, and provide a good review below, with the chart above.
Challenger (Amex - CHQ): is a Canadian Energy Company, whose Primary
Play is in Trinidad in a JV with Canadian Superior Energy [ SNG [Amex also ].
Personally I have followed SNG for some time, since the 1’s & 2’s, but I could
never get a handle on how the stock moved. Interestingly CHALLENGER is
an easier stock to trade, if that what you want to do. The warrants make an
interesting trading proposition as they are STRIKE @ $4.40 and run until
March 6, 2010, and at $1.60 ea, they are evaluated as UNDER VALUED.
What makes the stock soooo interesting to me is a Breakout from a Quad
TOP formation with a projected eventual objective of $11.25.
This is primarily a Nat Gas play [the primary play motivating the stock now ] in
the prolific Caribbean Basin, and this is the first well that has been ‘brought-in’
in this particular section. What makes it of individual interest is that the well is
flowing more gas than predicted and will be coming into production by their
estimates within 60 days.
CHQ has interest in the oil and gas patch off Nova Scotia and around Sable
Island, but that is not the clincher, nor are their interests in Western Canada.
You can find mucho activity about it on the Yahoo boards, Investor Village,
Stockhouse, and probably Agora. While that is NOT where I’d start my DD, it
is a place to get an idea of whom the players are, and get up to speed on
developments surrounding the company.
Oh yes I have an upside objective for Nat Gas which is a screamer, and is
multiples of its current price, which makes this stock even more interesting.
Trinidad has the largest Nat Gas refinery and LNG operations in the
America’s and is a stable jurisdiction oriented to protecting that economic
asset, so I do not expect any upset from that quarter.
The chart below provides me with two formations glaring right back at me.
1/ First and obvious is the Breakout from a Quadruple Top. I love quads they
take years to unwind, and run and run and run. This formation has the least
number of failures to perform of any I have ever watched.
2/ Second and almost as obvious is a Symmetrical Triangle forming RIGHT
OFF THE QUAD ! ! ! Usually they resolve in the direction of the TREND.
Right now doing a Vertical Count, I’d say it could give a $3.00 pop from the
point of its breakout,
For me, it’s the Technicals that are compelling here, clearly illustrating a great
deal of buying pressure,that is a direct result of its fundamentals. The stock,
since QUADS could take awhile to work out, might be like MCF was, a clear
keeper to the top, whereas I think the warrants would offer a great trading
play up and down, up and down.
For you who’d like to see my trading take on how to run it, you can contact
me, Denaliguide @hotmail.com, also on MSN. Credits to Stockcharts.com
for their chart. For the record, both myself and associates have positions in this stock and warrants.