Starpoint Energy Trust/APF Energy Trust Deal

06/28/05 01:31:06 PM

by Koos van der Merwe

Starpoint Energy Trust completes the merger with APF Energy Trust.

Security: SPN.UN-T
Position: Accumulate

Starpoint Energy Trust announced on June 27 that it had closed its merger with APF Energy Trust. APF unit holders received 0.167 of a Rockyview Energy share, plus 0.63 of a Starpoint Energy Trust share. Without working out the actual calculations, let's see what Figure 1 tells us about Starpoint Energy Trust and Rockyview Energy Inc. (RVE-T).

Figure 1 shows how Starpoint recently formed a cup-and-handle formation, with the handle at $19. This was broken on June 15 as the price moved up strongly to a high of $19.90 by June 17. It fell back to test the support line, drawn from the handle of the cup-and-handle formation. What now?

The target for the cup-and-handle formation is $19.68 (18.69 - 17.70 = 0.99 + 19.69 = 19.68). The price rose as high as $19.90, exceeding the target before falling back.

Figure 1: Starpoint Energy Trust

Graphic provided by: MetaStock.

To help me in my decision-making, I combined three indicators in MetaStock Expert Advisor. The indicators are:

1. Fisher transform indicator
2. True strength index (TSI)
3. Stochastic/relative strength index (RSI) oscillator

My reasoning for the buy/sell triggers are as follows:

a. If the Fisher transform indicator gives a buy signal and the TSI is positive, then show a buy signal (dark blue arrow)
b. If the Fisher transform indicator gives a sell signal and the TSI is negative, then show a sell signal (dark red arrow)
c. If the stochastic RSI is below the 30 level and suggests a buy signal, then show the arrow as a suggested buy signal (light blue arrow)
d. If the stochastic RSI is above the 70 level and suggests a sell signal, then show the arrow as a suggested sell signal (light orange arrow).

I will use the Fisher transform plus TSI for a long-term position and the stochastic RSI formula for a short-term trade, with a rising stop of 8%. I will not short the stock.

Note: All the MetaStock formulas are available from the MetaStock website. If you require a copy, email me.

At the moment, even though the price is bouncing off the support at $19, there is no buy signal. I will hold off buying until I receive a signal, and not try to bottom-pick. Is the share worth buying, for growth or income?

Do note that Canadian income trusts pay shareholders a monthly dividend, and in the current low interest rate environment, they are very popular. At a price of $12.90, APF Energy Trust was offering a yield of 14.88% per annum. Starpoint, on the other hand, was offering a yield of 12.57% on a price of $19.10. The drop in price of the trust could be because of the lower yield offered.

Koos van der Merwe

Has been a technical analyst since 1969, and has worked as a futures and options trader with First Financial Futures in Johannesburg, South Africa.

Address:	3256 West 24th Ave
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Comments

Date:�06/28/05Rank:�4Comment:�1) Possible a larger cup handle forming? 2) Better show all the indicators (TSI/fisher) mentioned in the chart.

Date:�06/30/05Rank:�3Comment:�

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CUP WITH HANDLE

Starpoint Energy Trust/APF Energy Trust Deal

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