Larry MacDougal
I bought Daylight stock at $10 and it's now above $11. Should I sell and take my profits?
Fred
Hi Fred,
I last posted on Daylight Energy Ltd. on Jan. 5, 2011 when it closed at $10.08. At the time it was noted that the stock offered an attractive dividend and that a number of factors indicated that it had a chance to move higher. Which it has. Let's consult the charts to see if there might be more gas left in the tank for DAY.
The three-year chart indicates that the stock has moved up to $11.23, generating a healthy 11.4 per cent capital gain since Jan. 5, 2011. I know a lot of readers are going to turn their nose up at this return but let's not get all uppity about an 11.4 per cent rise in the first quarter.
My evaluation is that DAY has done its job for 2011 before the close of Q1. While the broad S&P TSX Composite Index up 4.43 per cent year to date and the Energy Sub Index up 8.23 per cent, it looks like you picked a benchmark beater!
What is also evident is that there is resistance at $11.50 that has been in play since December of 2009. What should be considered is that it is going to take a big push to get over this hurdle. The company plans on spending $250-million to grow production by 3.6 per cent in 2011.
The six-month chart illustrates that the RSI is starting to bend down indicating a shift in momentum from buying to selling. Given the benchmark beating returns you have generated I would suggest that profit taking would be in order. Yes you might leave some gains on the table but better to book a profit than to curse a loss. You should monitor the company to keep informed of its efforts to boost production and look to mid July for the beginning of another period of seasonal strength.
Happy Capitalism!
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