Dynegy (DYN)

Company

DYN 1-year chart DYN 1-year chart

"Dynegy provides wholesale power, capacity and ancillary services to utilities, cooperatives, municipalities and other energy companies in 14 states in our key U.S. regions of the Midwest, the Northeast and the West Coast. The company's power generation portfolio consists of more than 19,000 megawatts of baseload, intermediate and peaking power plants fueled by a mix of coal, fuel oil and natural gas. Our geographic, dispatch and fuel diversity contribute to a portfolio that is well-positioned to capitalize on regional differences in power prices and weather-driven demand." (company website)

DYN 6-month chart
DYN 6-month chart

Buy

29-May-08. Dynegy ended a long downtrend in early 2008 and has been rising steadily since then, practically in a straight line.

  • Price momentum (PPO) — increasing steadily since March
  • Relative strength (RSI) — increasing steadily since March
  • Trend (ADX) — strengthening with buying pressure (+DI) above selling pressure (-DI)
  • Volume — several days in May of higher than normal volume

Based on technical analysis, MarketEdge calls DYN a "strong buy" in a "weak upward trend."

Sell

gain Bottom line
-37%

7-Aug-08. Well, it seemed like a good idea at the time. Obviously, now is not the time.

Right after I bought DYN it pulled back a bit then rose back up to my cost. Then, in short order it broke below the 50-day moving average and the lower Bollinger band. At that point I should have cut my losses and got over it. But I didn't. I kept finding explanations (i.e., excuses), like "the whole market is down" and "it's probably just a correction."

Soon the 50- and 200-day averages turned down, and again I should have bailed. But I didn't. "In for a penny, in for a pound." There was massive dumping of shares (20 million in one day!), which sometimes happens just before a reversal. "Mybe there will be a good earnings report and it will shoot back up." Yesterday, with earnings due out after the bell, a rally took place. "Somebody must know something" became the mantra of the day.

This morning, before the bell, DYN released its earnings— a loss of 32¢ per share compared to an Expected profit of 3¢. Yikes! When I checked pre-open action, DYN was trading around $6 so I put in my sell order. Alas, it was 7 weeks too late.