Spark is up 18%. Buy more or take profit?

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Way back on 12 March 2012 in my very first article for the Switzer Super Report, I recommended a “Steady as she goes” stock – Spark Infrastructure (SKI). Back then, Spark was trading at $1.365. Let’s take a look at how this stock is performing now.

Investors are up 18.5% based on the current price, including the dividend ($1.565 + 5.25c dividend), or as much as 25.8% if one sold at its ultimate high of $1.665 plus dividend ($1.665 + 5.25c dividend), exactly a week ago.

If you were unable to enter the stock on or around the day the article was published in March, you had a second chance a month later on 20 April and 23 April, where the price hit lows of $1.365 and $1.36, respectively.

My updated recommendation for Spark is to look for an exit.

Depending on your parcel size, you could take profit now, and lock in the 18.5%, which is a great return in six months.

Or, if you have a large holding, it’s likely you will need to ‘finesse’ the exit. Resistance is at $1.62, which is 3.5% higher. If it gets to this level, or higher, one ought to take some more profit. This is marked on the Chart with a yellow line and “Sell” above it.

SKI – Spark Infrastructure $1.565 17 September 2012 – “Time to scale out of defensives?”

Why do I like the chart?

1) Price action is still above yellow line – the 200-day moving average.

2) Support is close at $1.55, at which point how the stock trades will provide an indication as to how fast we may expect this current sell-off to be.

3) The stock yields 6.7% as I write. A reasonable return.

4) The 200-day moving average – the yellow line – is still pointing up. It is at $1.46 or 7.5% lower.

5) In the six months since this stock was recommended, the trend has been holding firm. The 200-day moving average has never been breached by price action.

What don’t I like?

1) Price action is beginning to slow in the stock’s upward march.

2) $1.65 is an important level, and will be a test as to whether we are at or near a top. A week ago on September 10, price action got to a high of $1.665, and closed right on $1.65. It has traded below this mark ever since.

3) Daily indicators are pointing to softness to come.

4) Weekly indicators are giving off warning signals of a top.

5) Where the charts had no negativity or very little negativity before in the past six month, this has now changed. A patient rotation out of this defensive position is probably called for.

Important information: This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. Anyone should consider the appropriateness of the information in regards to their circumstances.

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