TC PipeLines, LP : A technical correction is coming
March 04, 2013 at 09:25 am
By
Entry price | Target | Stop-loss | Potential |
---|
US$47.35 |
US$0 |
US$48.4 |
+100% |
---|
We may assist, in the coming trading sessions, the end of the technical recovery.
From a fundamental viewpoint, the company shows few problems. Indeed, the valuation of the stock is very high, as shown by a EV/Sales ratio of 14.8x for this year. Furthermore, the consensus from Thomson Reuters largely revised downward the EPS estimates for this year, from USD 3.17 in January 2012 to USD 2.45 today.
Technical indicators show an overbought situation. Prices are near to the USD 47.5 resistance which has already provoked a collapse of the stock in the first half of last year. This pattern should put an end to the current bullish trend and prices could come back to the USD 45.2 short term support.
Therefore, to take advantage of this technical correction, a short position may be opened in the current area to target USD 45.2. Once this level reached, the security can continue its decrease towards the USD 39 support. In case of further acceleration, the stop loss will be triggered above the USD 47.5.
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