Update: Cenovus offers an explanation of why it tanked almost 5% today (Apr 22). I doubled down on my short Cenovus Energy (CVE.TO) position this morning. The price of CVE.TO moved in my favour a day after my initial short entry. It then bounced back up strongly (about 2.5% rise in a day) yesterday to test \$29.50. However, it has backed down since. The fact that it didn't touch the \$30 price level is a good sign. Crude Oil (CL on NYMEX) made a similar move. It tested the 50% Fibonacci resistance at 84.5 and backed down. This is again a good sign for my short as it signals the downtrend is a go.
[caption id="" align="aligncenter" width="570" caption="Cenovus Energy Inc. (CVE.TO)"][/caption] However, crude prices became very choppy in the afternoon today as shown in Figure 2. So perhaps there is still room to move up. I will keep an eye on the 84.50 and 85.50 resistances for crude and 29.50 and 30.00 for CVE.TO in the coming days. [caption id="" align="aligncenter" width="512" caption="Crude Oil"]1[/caption] A couple of other signs that I watched on this addition to my short position.
- this morning, the Bank of Canada gave strong hint that they will raise interest rate in June. However, USDCAD made a marginally new low briefly and then bounced back up above parity. This is bullish for USDCAD.
- EnCana earnings topped estimates but the stock dived after the opening rush with at least 3 times morning volume as compared to the past five days. ECA.TO is hanging on to the 31.5 support level before noon but closed above it today. This is not a good sign for the energy sector on the TSX.
A confirmation with this down move would be a break of the recent low at \$28 for CVE.TO and \$82 for crude oil.