For the most part I try to be agnostic to a specific investment for my own portfolio but attempt to be a bit more discriminating for clients. Don’t get me wrong, I am not devoid of investment morals but rather my driving force is to make money. Doing so allows me to use that money to promote and support the companies I believe in. Clearly, no one wants to invest in a “bad” company but the problem is there is no one definition of what a “bad” company is. For me, names like Monsanto and Wells Fargo are a few that are on my list of companies to avoid as they have a history of consistent “bad” behavior. I have learned over the years, everyone’s list of what is “bad” is different. The reason I bring this up is because the topic of this post is about a company that, for me, is on the edge of being “bad”. They are either evil, poorly managed or very, very unlucky. I am not sure which.
Regardless of where Pacific Gas and Electric falls, their chart (PCG), caught my attention. Because of a series of missteps (read ineptitude), their stock has fallen almost 50% since peaking in September of last year. It bottomed in early February while forming positive RSI momentum divergence, the sign of a potential bottom. Since that time price has pushed higher and broken out from a textbook, symmetrical inverse head and shoulders reversal pattern. The pattern’s upside target points to T1, a very close proximity to the falling 200 day moving average and ~20% above the pattern’s neckline (breakout level). Notice in the bottom pane of volume, the breakout was confirmed with an increase of more than 70% higher than its average and also provided a pocket pivot buy signal yesterday. In addition, it gapped higher at the open right in to the unfilled open gap (that will likely be filled) created on December 21-22. When looking at the entirety of the signals, they seem to be screaming “buy me” or better yet, trade me. Any purchase should be considered for now as a short term trade, a reversion to the mean opportunity. What tells me that? Price sits below a falling 200 day moving average. Until it is pointing north and price is situated comfortably above it, this is only a trade. That, of course, could all come to work itself out over time but for now, it should be viewed as only a short-intermediate term opportunity
No one should take the intent of any of my posts as recommendations or promotions to buy or sell a security they are nothing more than ideas to make money. Not only do I not know your risk tolerance but just as importantly, your moral tolerance.
