Contact Energy - CEN Chart

[troyvdh]

...mmm....sorry but its no and no....i have always detested small print....but I would be trully grateful..if you enlighten me...and perhaps others as well....
cheers troy

[gonzo56]

Hey,
I was wondering, could someone who is really good at charting please explain the situation with CEN at the moment.
All I know is that the RSI is at the lowest its been for two years, and the SP has been hugging the bottom Bollinger for a while now... What indicators does one look at to pre-empt a reverse? A rise in OBV would be helpfull I guess.. Or do you just wait for a reverse to happen, then jump on the band wagon..
Thanks in advance.

[Phaedrus]

"Could someone please explain the situation with CEN at the moment."
There is very little to explain. CEN is crabbing sideways in a $5.60 to $6.60 trading range, and has been for 2 years - so far. No-one and no system can tell you how long this trading range will run - or even whether it will break to the upside or the downside.

"All I know is that the RSI is at the lowest its been for two years"
While this is Bearish, it doesn't mean all that much. It will trigger another buy signal when it rises above the OverSold threshold. OverSold RSI values generally mark good entry points for those wanting to buy.

"The SP has been hugging the bottom Bollinger for a while now."
That's what happens when stocks crab sideways at low values.

"What indicators does one look at to pre-empt a reverse?"
Your best bet would be to look for a Bullish Divergence between the price action and an oscillator. There have been none so far, and you cannot guarantee that there will be one when/if CEN does finally turn up.

"A rise in OBV would be helpful I guess."
More than that - any transient CEN rise is going nowhere without it. Note that the OBV has been falling while the stock has been tracking sideways. CEN is still being distributed.

"Do you just wait for a reverse to happen, then jump on the band wagon?"
You have 4 options :-

(1) Buy CEN on oscillator Buy signals and hold, waiting and hoping for an eventual breakout.
Advantage :- You will have bought at lowish prices.
Disadvantage :- You could end up holding a stock that goes nowhere for literally years.

(2) Ditto as above, but sell on oscillator Sell signals, trading the range.
Advantage :- You are honing your trading skills and making a little bit of money.
Disadvantage :- You could well find that you have sold just as CEN finally breaks above the trading range - or, worse, bought just as CEN finally breaks below the trading range.

(3) Buy on any eventual breakout above the $6.60 resistance.
Advantage :- You have not wasted perhaps years holding a stock that has been going nowhere and you have avoided exposing yourself to the risk of CEN breaking to the downside.
Disadvantage :- You will have missed out on the first, say, 90 cents of any continuing uptrend.

(4) Forget about CEN and buy a stock that is already in an uptrend.

[gonzo56]

Thank you Phaedrus for that thorough answer.
I just realised this was your thread; you have done a remarkable job filling it with useful knowledge over the years!

Looking back on the chart, I can now clearly see how following the RSI (breaks above 30) could provide a very profitable method of timing purchases. (With CEN anyway)
In the meantime, I will choose #4 “Forget about CEN and buy a stock that is already in an uptrend.”
And thanks again, I’m sure I speak for everyone when I say I greatly appreciate your input.
Gonz

[macduffy]

Yes, many thanks, Phaedrus.

I hold a few CEN in my long term portfolio, mainly as a hedge against rising electricity and gas bills. A such it's been a bit of a failure but I'm looking at the long terms here - yes, I know, that's when we're all dead - but however!

Next Monday is the deadline to opt out of the "compulsory" reinvestment of the interim distribution in favour of the cash. The price struck for this is $5.84 so I'm taking the cash this time.

[percy]

Like you macduffy I hold a few in the wet 'nd forget portfolio.However with the yet to be announced rights issue to fund the Te Mihi geothermal project,I felt it best to take the reinvestment as I would get a larger allocation to the rights issue.I also feel the pending rights issue,{the details yet to be announced},has put a damper on the SP.However with prices of all energy sky-rocketing,I am holding CEN as a hedge.I see CEN as a sensible portfolio holding.

[macduffy]

Fair enough, percy but I doubt that it's the threat of an impending cash issue that's really holding CEN back, after all the SP's been in this channel for over two years now!

I'll take whatever's on offer but I'm not seeking to do any more than that. I'll have the cash, thanks, particularly as the strike price is still higher than the current SP.

[percy]

Fair enough, percy but I doubt that it's the threat of an impending cash issue that's really holding CEN back, after all the SP's been in this channel for over two years now!

I'll take whatever's on offer but I'm not seeking to do any more than that. I'll have the cash, thanks, particularly as the strike price is still higher than the current SP.

I think you are right,but I am happy to slowly add to my holding.

[gonzo56]

28 April 2011

CONTACT LAUNCHES ENTITLEMENT OFFER TO SUPPORT FUTURE GROWTH

Contact Energy today announced a 1 for 9 pro rata renounceable entitlement
offer of new Contact Energy shares which will be open to existing New Zealand
and Australian shareholders, at an offer price of NZ$5.05 per share.

Contact Energy plans to raise approximately NZ$350 million from the offer.
The funds sought in the offer will enable Contact Energy to strengthen its
balance sheet for investment in growth opportunities, the first part of which
is the 166 megawatt (MW) Te Mihi power station to be constructed by mid-2013.
http://www.nzx.com/markets/NZSX/CEN/...-future-growth

[Snoopy]

28 April 2011

CONTACT LAUNCHES ENTITLEMENT OFFER TO SUPPORT FUTURE GROWTH

Contact Energy today announced a 1 for 9 pro rata renounceable entitlement
offer of new Contact Energy shares which will be open to existing New Zealand
and Australian shareholders, at an offer price of NZ$5.05 per share.

Contact Energy plans to raise approximately NZ$350 million from the offer.
The funds sought in the offer will enable Contact Energy to strengthen its
balance sheet for investment in growth opportunities, the first part of which
is the 166 megawatt (MW) Te Mihi power station to be constructed by mid-2013.

And the share price rises 11c! Interesting. A very unusual reaction to a cash issue from NZ investors. Perhaps it was less than expected and shareholders are rushing to pick up more of a good thing? Perhaps more impressive was a commitment to return cash to shareholders who don't take up their rights, via a tender for untaken up shares. I have never seen that done before either. An NZ company who thinks in terms of their shareholders best interests? Wow!

SNOOPY