ChartI was looking at the chart. CJ share price was destroyed this year. It has a 52 week high of $10.81 and a low of $3.76. I have been involved with this stock for the last few months and did know follow it when it was a double digit stock.
According to the chart the share price started the downward trend in Feb 2017 and then in the beginning of March 2017 the stock created a death cross when the share price was still above $9.00. Since then it continued to tank all the way to the bottom of $3.76. It hit that bottom once.
The stock is very close to its SMA 200. Once the stock breaks above the 200 sma with high volume then resistance becomes support. CJ has been consolidating well for a while. Most of the sellers who drove down the stock would have been exhausted. CJ had some help from the short sellers too.
The next important technical event is the share price moving over sma 200 and staying above it. This will create a bigger technical event that is golden cross when the 50 sma average crosses over 200 sma.
If oil prices have bottomed out and pipe line issue is resolved then with WTI above $60 one may expect golden cross soon. We might find some resistance in the area of $5.50 and then after that there is not much resistance till $6.50 then at $7.50 and around $8.50 area. When this stock recovers it is going to form nice cup shapes at these different resistance level.
$5.50 is the area where the stock failed last time because it become very overbought and there could be some overhang from the last financing which according to some was not priced right and RBC and others dumped the stocks which resulted in bottom of $3.76.
We can speculate based on the charts and other technical indicators. But the most important factor that influences the share price is the fundamentals of the sector and the company. If in 2018 WTI stays above or around $60 then we should expect recovery in the share price of the stock.
I have some concerns about the management and their agenda. . One of the reasons that I like this stock is because it has a small float. The management is bent upon further acquisitions and further dilutions of shares. I have no problem with the last acquisition. But they should now slow down till the share price recovers or hits double digits.
The company has signed a purchase and sale agreement (PSA) to acquire an additional 10-per-cent working interest in its operated Midale unit for $22.5-million. The acquisition, which is expected to close on Jan. 2, 2018, will be financed through the payment of $11.25-million in cash and the issuance of 2,314,815 Cardinal common shares.
I do not know what is the hold period for these 2.3 million shares. If there is no hold period or short hold period then these shares will hit the market.
The share price of CJ was destroyed because of last dilutions. CPG destroyed their share price because of dilutions.
When managements are reckless and continues to dilute the shareholdings then one should run from that stock. Unless there is a distress sale, most of the buyer usually pays too much. CPG paid too much.