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Case study : ECA

Jack Chan
www.traderscorporation.com
April 19th, 2006

Our service is to provide entries and exits to the three sectors of metals, energy, and technology for both investors and traders, using funds and ETFs, for simple execution, low maintenance management, and most of all, diversification. However, individuals with high net worth may wish to expand their exposure to include individual stocks, and as an extended benefit to our loyal subscribers, we can provide a case study of these stocks, time permitting, in a “bottom up” approach.

What is a “bottom up” approach?
It is a simple process of beginning from a shorter term time frame, and work our way up to a longer term time frame. Most investors make a common mistake by doing the exact opposite: they plunge heavily into a stock based on their long term outlook, without considering the current technical merits, thus end up suffering a substantial drawdown, which could result in a loss and subsequently, missing a potentially lucrative investment.
Lets begin...

ECA.TO – daily chart, short term.
Analysis – currently in the process of completing the “handle” of a “cup with handle” pattern, which is a bullish pattern, and upon a breakout, we have an upside price target of $70.
Signals and set ups – a TLBBS will be confirmed upon the breakout. Traders can buy now with stop below 50ema, risking 4% which is acceptable for individual stocks.

ECA.TO – weekly chart, intermediate time frame.
Analysis – a five month correction appears to have been completed, a first significant correction in this bull market.
Signals and set ups – currently on a TLBBS, investors can buy now with stop below weekly 50ema at $51.05, risking 10%, which is high for individual stocks. Investors can enter positions using current trader’s set up at a risk of 4%.

Monthly chart is unavailable due to lack of data.

The 35% correction in ECA was a direct result of plunging natural gas prices. However, natgas appears to have found support at the weekly 200ema, and is now completing the bottoming process of a major bull market cycle low.

Summary

With natgas stabilizing after a plunge of more than 50%, oil and gas stocks such as ECA has firmed up considerably, and now at the point of a breakout to a potential 20 to 30% gain for the near future. With risk at 4%, this is a very attractive opportunity for both traders and investors.

Disclosure: staff and employees at Traderscorporation.com may or may not own shares of ECA, this technical analysis does not take into consideration of fundamentals which are company specific. Due diligence is required.

 

April 19th, 2006
Jack Chan
email: info@traderscorporation.com
website: www.traderscorporation.com