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business newsThe Perfect Play in Energy
Sempra Energy is engaged in various facets of energy production from electric, natural gas and solar -- and its weekly chart is jaw-dropping.
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Now while I like the long-term fundamental stories coming from these segments, as a money manager my buys are based primarily on the chart setups. One company that has come to my attention this week is Sempra Energy (SRE). Sempra is engaged in various facets of energy production from electric, natural gas and solar. It was these last two areas that piqued my interest in Sempra, and had me looking a bit deeper at the chart.
The weekly chart on Sempra is jaw-dropping. Depending on the time horizon, some traders may look at Sempra and think that it has virtually stood still for multiple years. In fact, it is trading today at levels it also saw in late 2006. Look a bit closer, and the beauty of the weekly chart starts to unfold before your eyes.
Sempra is coming into resistance at a descending trend line that started back in early 2007. It is my belief that this area offers superior risk reward, based on the fact that resolution is near at hand. Either Sempra breaks this dominant resistant over multiple years, or it turns tail and once again retreats into the base.
Since Sempra is scheduled to report earnings February 24, I am not inclined to take a full position ahead of those numbers. But I have initiated a third position today with a stop at $49.50. Once earnings are out of the way and I see how traders react, I will have a better idea how to proceed. So while I am truly intrigued by the big-picture story for Sempra as it regards liquid natural gas and solar, I also know there is a proper time to be a buyer. I have decided to take a nibble at these levels.
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