CNEH Technicals

China Northeast Petroleum Holdings (CNEH) is a company with apparently incredible fundamentals. It drills oil and has a guaranteed contract to sell it to PetroChina. They have projected earnings of $.50 for 2008, given $75/barrel oil. At a P/E of 6 (the historical low), that's a price of at least $3.00 by early 2009 (a 71% increase).

It has been pretty painful to be long in CNEH over the past 6 months. However, I have several reasons to believe we are near a bottom. First of all, notice that the decline has been rather choppy, without forming clear 5-wave declines. That's indicative of a correction. WaveC would equal WaveA at 1.75. Price hit 1.61 this morning. Also, it looks like Wave-c of WaveC is forming as an ending diagonal. These are normally followed by sharp up moves.

Another interesting fact: volume has been downtrending as price corrected. That means that less and less shares are being sold as price is declining, a good sign of future strength.

Finally, there is MACD-divergence forming. When MACD curls up, the divergence will be confirmed.

Ideally, I would like to see a close around 1.75 or 1.80 on higher volume than yesterday. That would tell me that today's price action was a final washout of the ending diagonal.


wmc.corp said...

Information about CNEH is especially difficult to find but here are a couple of excellent articles.



The stock still trades on the pink sheets but hopefully that will change because all this company needs is exposure to more investors. In my view, this is a rare find.

Kevin Brennan did his homework.

Narayana said...

CNEH actually trades on OTCBB. They just completed a financing deal which includes a requirement to obtain an AMEX or NASDAQ listing by Feb 2009.

wmc.corp said...

Thanks for the correction. I got the "pink sheet" notation from my broker, who does not have a lot faith in the stock but I still do.

wmc.corp said...

Thank you for the correction. I

wmc.corp said...

Thank you for the correction. Do you know of any other place to find current, accurate information about this company?

Narayana said...


there is a lot of good info, but you have to wade through a lot of pumpers and bashers. good luck!