Seventy Seven Energy, Inc. (NYSE:SSE) Jumps Through the Moving Averages

[[tagnumber 0]]Seventy Seven Energy, Inc. (NYSE:SSE) is jumping up from the bottom in an upward correction this week. The company announced its third quarter earnings, however, the appreciation of the stock does not seem to be driven by any incredible improvement in the company‘s performance.[[tagnumber 1]] [[tagnumber 2]][[tagnumber 3]][[tagnumber 1]] [[tagnumber 2]]SSE jumped 17.05% yesterday and closed the session at $1.51. The trading volume was significantly higher than in the previous session and technical indicators are in a strong bullish position. The chart pattern looks bullish as well with two sessions of consequent increase yet the trading range is getting narrow which is a sign of market consolidation and limited upside potential.[[tagnumber 1]] [[tagnumber 2]]As the whole energy sector is rallying up this week, it looks like SSE is profiting from the traders‘ high interest in energy stocks. After hours trading data shows further appreciation of the share price, however, the company does not have fundamentals that could support that on the long term.[[tagnumber 1]] [[tagnumber 2]]SSE third quarter financial report showed that sales have dropped to less than half of what they used t[[tagnumber 10]]o be in Q3 of 2014. Surprisingly, the company reported nearly the same positive operating cash flow although the net loss surged from $1.77 million last year to over $48 million this year. Details show that the positive cash flow results from some gains on the sale of assets and property, as well as from the increased amounts of non–cash compensation.[[tagnumber 1]] [[tagnumber 2]]In June, SSE sold out its subsidiary that provided drilling rig relocation and logistic services for a total consideration of $42 million. Only $15 of that amount were received in cash, the rest was paid in the form of a promissory note that will be due in 2020. In the last quarter, the company sold its water hauling assets and other ancillary equipment which was also not a positive signal for investors.[[tagnumber 1]] [[tagnumber 2]]In addition, SSE has disproportionally high debt in the form of notes. They are not convertible, however, they impose severe covenants that limit SSE opportunities to raise more capital on the market.[[tagnumber 1]] [[tagnumber 0]] [[tagnumber 1]]