Connacher Oil and Gas Limited (TSX:CLL) is a Calgary-based integrated oil sands company that trades on the Toronto Stock Exchange under the ticker CLL. More specifically, Connacher is a producer of crude oil, bitumen, natural gas and natural gas liquids. The Company’s principal oil sands assets are in the Great Divide/Algar region of Alberta where Connacher has a 100% interest in nearly 100,000 acres of oil sands leases. Conventional production is being done in Alberta and Saskatchewan. In addition to these assets, Connacher owns and operates a heavy oil refinery in Great Falls, Montana.
Operations in the Great Divide have recently been in the news for Connacher as the company announced that it anticipates production increases and declining steam-oil rations at its Pod One plant in northeastern Alberta to continue throughout the year. On September 8th, Connacher announced the on-time and on-budget completion of its 13.1 megawatt cogeneration facility at its Algar steam-assisted gravity drainage bitumen extraction plant in Alberta.
From a technical standpoint, the T.CLL chart is in a prime position for a possible upward move. The price has been in a recent downtrend since May where it reached a peak near $2.00 of an 18-month climb that began at $.60. Presently trading at $1.20, this area has been a source of significant support for a couple reasons. First, the price per share met resistance in this area on its climb in October of 2009 before it finally broke through it in December of 2009. Classic technical analysis states that resistance become support upon the breakthrough. Adding validity to this rule is the fact that the price has dropped back to these levels on three separate occasions and bounced back up each time.
The indicators are slightly mixed, but leaning towards the bullish side of things. While the RSI is a bit of a concern as it is about to head into oversold territory, the majority of the lower indicators are looking promising. The MACD is at -2, but trending back towards 0 (commonly called ''the money line''). The fast line of the MACD indicator is on top, but the histogram is trickling back down towards zero at the same time giving the MACD a slightly bearish look, but without a break of the aforementioned support, there will probably not be a bearish crossover of the signal line. The ADX is properly positioned for a stock to make a move back north as the –DI is breaking back down and has been trending down since late August.
Money indicators are showing a possible move as well. There is a great deal of separation between the MFI(7) and the longer MFIs (14,21) as the MFI(7) is now breaking into oversold levels, which often leads to a bounce as separation is often short-lived.
The Accumulation/Distribution line is coming out of a downtrend and appears to be at the beginning of an uptrend. While very early to make a true distinction in an A/D uptrend, the Chaikin Money Flow, which is based on the A/D is in a strong uptrend back to zero which means that selling pressure (which has been dominant recently) is quickly being equalized by buying pressure. The CCI and Full Stochastics are also about ready to break out of oversold levels, which is a common buy point for people that play stocks by trying to grab them at the bottom before a move upward. A final bit of information is derived from the TRIX indicator which is a relatively reliable indicator for determining longer-term movements. It is critical that the TRIX is continuously trending upwards towards zero for positive movement to happen, which in the case of CLL, it is.
Overall, Connacher Oil and Gas has a bullish look to it. The Company has legitimate operations and a variety of assets and is continually developing operations to maximize efficiency and generate revenues. From a technical standpoint, the chart is in a classic position as a possible bottom given that a strong support has been established at these levels over the last year and a half. It is imperative that the support level holds or this play should be put ''on the back burner'' and wait for the indicators to align again. But, the play could be ready to turn and we are closely monitoring its actions as we don’t want to miss a move. As always, this is merely our interpretation of the CLL chart and we strongly encourage all investors to conduct their own proper due diligence and consult with a financial advisor before making any investment decisions.
