Why JC Parets Has Been Watching Chesapeake Energy

JC Parets is a weekly guest on #PreMarket Prep, a daily trading idea radio show hosted by Joel Elconin and Dennis Dick. Tune in to the daily broadcast live Monday-Friday at 8 a.m. ET here.

JC Parets is the founder of Eagle Bay Capital and discussed why he has been paying close attention to shares of Chesapeake Energy Corporation (NYSE: CHK) with a "well defined" low in March, which was a key Fibonacci extension.

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Shares of Chesapeake Energy traded at new 52-week lows of $12.45 during Thursday's trading session and were lower by more than three percent by Thursday afternoon.

"Here we are just under $13 and change [during Thursday's pre-market trading session], if we can get above the March lows, I think we can get a margin squeeze," Parets said.

What Makes Chesapeake Energy Special

The trading pro noted that shares of Chesapeake Energy have the third largest short interest among all companies in the S&P 500. He also noted that there are very few analysts with a Buy recommendation and he would be a buyer only if shares can trade above Wednesday's highs of around $13.45.

"If we can stay above there, I'd be all over it," Parets concluded.

Just A Note...

Fadel Gheit of Oppenheimer downgraded shares of Chesapeake Energy to Perform from Outperform.

The analyst suggested that the company will report losses of $544 million this year, only to worsen to $833 million next year. In addition, the company is expected to realize a free cash flow deficit of $2.1 billion this year and $2.7 billion next year.

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