Enterra Energy Trust (ENT)

Company

"Enterra Energy Trust is a conventional oil and gas trust based in Calgary, Alberta. The Trust acquires, operates, and exploits petroleum and natural gas assets principally in the provinces of Alberta and British Columbia, Canada and in the states of Oklahoma and Wyoming, United States of America." (company website)

ENT 1-year chart
ENT 1-year chart

Sell short

ENT 2-month chart ENT 2-month chart

Enterra has been in a downtrend for the past year, and the latest earnings report isn't going to help: "For the fourth quarter of 2006, the net loss increased to $69.2 million from $12.9 million." That's a five-fold bigger loss! Although the report was larded with explanations and implications that the "hard decisions" had now been taken, I am betting that will not be enough to reverse the downtrend. The Market likes results.

  • Price momentum (PPO) — was picking up until earnings
  • Trend (ADX) — still fairly strong, and selling pressure (-DI) is still above buying pressure (+DI)
  • Money flow (CMF) — strong outflows for past year
  • Relative strength (RSI) — got up to neutral, but pointing down again
  • Volume — decreasing again after picking up at end of 2006

Based on technical analysis, MarketEdge calls ENT a "short candidate" in a "strong downward trend."

Buy to cover

gain Bottom line
10%

Enterra has been hanging around between $5 and $5.25 for several days and there are signs of improvement in the chart: RSI turned up again without dipping below 30; PPO is increasing slightly; and the outflow of money is reversing. On the other hand, ENT is still trading well below the trend line and the 50-day moving average. Nevertheless, I decided to cover and pocket a tidy profit rather than take the chance that the higher lows ($4.86 then $5.06) mark the beginning of a turnaround.