Provident Energy: I see a trend.
December 21st, 2007 by Grant in: Investing, Market Trends, Oil & Gas, Royalty TrustsMy Provident Energy Trust (PVX: chart, web, Y!) has been on the slide since the beginning of November. I can’t figure out why.
The only conclusion I can come to is that it’s attributed to end of year tax selling, but that theory only makes marginal sense. After all, PVX is continuing its CDN$0.12 monthly dividend, and fundamentally, I don’t see why they’d drop the distribution any time soon. Crude oil ($wtic: chart) is still North of $90 per barrel, and natural gas ($natgas: chart) is holding above $7 per MCF.
So it’s tough to tell why the stock has dropped nearly 30% since its high of $13.55 back in the first part of November.
However, I extended the chart out a few years today, and noticed a pattern. The stock price has dropped significantly in between late October and late November nearly every year since the inception in 2002. To further exploit the pattern, over the past three years, the stock starts its way upward after the beginning of the year and peaks somewhere around July.
I’m not sure how I’m going to play this. I’ve held PVX for its healthy monthly dividend, and haven’t really considered trading it based on the chart. However, it would be tough to miss out on a 30% gain that I can see coming…
What do you think? Would you play this trend?
Tags: crude oil | dividends | Market Trends | natural gas | Provident Energy | PVX | royalty trust
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December 21st, 2007 at 9:39 am
Hi,
I just came acroos your blog and I like that your blog sense is nice and different from others.
I have a question for you. I see that you are investing stocks in your Roth. I was wondering how do you do that taking into account the high commision costs. I recently opened a Roth with Vanguard and I want to buy some stocks there but I noticed that the commsison cost is the greater of $25 or .025/share which I think is quite expensive.
Can you guide me on this? Thanks.
GD
December 21st, 2007 at 10:50 am
I don’t know. The CanRoys are eating me alive and spitting out the crums. I kinda wish I had the guts to double down on Pvx at $10 and count on your analysis to help me get well next Spring.
December 21st, 2007 at 6:21 pm
GD, the Vanguard commissions you posted sound awfully high. My commissions at TDAmeritrade are $9.99 per trade, regardless of what type of account you have.
I would look elsewhere for an lower commissions.
Jack, yes, it’s been tough to ride this one out. However, just remember that stocks go up and stocks go down. PVX has seen this level many times.
Don’t let the price of the stock influence your decision on the strength of the company.
I think gas prices are going to rise again after the first of the year, which should help PVX’s bottom line.
December 21st, 2007 at 8:27 pm
Um…random walk theory?
December 21st, 2007 at 8:39 pm
Blue Book, maybe, but that’s not my style
I believe that history repeats itself, and that if you look carefully, you can find a cycle to everything: economics, finance, love, war… you name it.
Now, how you assert the trend is where knowledge must be applied.
For those not familiar with the random walk theory, click here.
December 27th, 2007 at 11:23 pm
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