3/20/2008

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.

6 comments:

wmc.corp said...

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

http://seekingalpha.com/article/62400-the-long-case-for-china-north-east-petroleum?source=yahoo

http://seekingalpha.com/article/46513-china-north-east-petroleum-holdings-too-small-to-buy-or-too-impressive-to-ignore

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...

www.investorvillage.com

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