Tuesday, January 22, 2013

Mixed Fortunes of Oil & Gas - Ezra, Swissco

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Mixed Fortunes of Oil & Gas

1. Ezra (Oil & Gas)
Ezra's year-start rally had its wings clipped severely after the company reported a 49% drop in 1Q net profit of US$6.8 million on 14 Jan. That resulted in a week tumble and the share price reduction continued this week with strong selling pressure. Despite all the enthusiasm regarding oil & gas counters, it is clear that cherry picking in this time of intense competition will still help the investor weed out stocks that are potential pit-falls. 
  • Selling continued this week seeing the stock tumble a further $0.04 from last week's close. In these 2 weeks, share prices have plummeted almost 14 cents. On the fundamental front, stock prices have been hit by poor profits, in canny resemblance to the situation Rotary engineering was in in 2012. Bad news at a fragile time.
  • MACD - declining positive divergence with MACD failing to challenge the Sept 2012 peak. Possible turnaround/volatility to ensue. 
  • RSI (25w) - perched along the 50% levels
  • Short with TP - $$1.09 (-6.5% from current levels) in the near term. If selling pressure still persists, expect the stock to continue down to the next support level at $0.97 which translates to almost a 2012 low.

2. Swissco (Oil & Gas)
Another of my long-tracked counter that only recently staged a spectacular increase in its share prices. Had all along felt a mismatch in fundamentals of the company with the its stock price (almost constant in 2012 after the year-start rally). Nonetheless, it is always an intriguing question to when such an inefficiency will eventually realised in the market - sometimes perhaps never. So happen, the time for this stock seem to have arrived on the back of very thin news. 
  • Prices challenged the key support levels at $0.27 last week to close above. This week, prices have shot above $0.30 for the first time though late selling today in the SGX caused prices to fall back to $0.295.
  • MACD - MACD has been on the rise for the past 5-6 weeks and does not seem to be waning any time this week.
  • RSI (25w) - RSI, though, has hit 70% on the back of a very strong run.
  • Long with fast TP - $$0.32 (8.5% from current levels) over 2-3 weeks. Prices are straddling between $0.33 and support by $0.27 with little in between. Still some room more for the rally to run unless selling pressure takes over and prices go back to $0.27 support again.

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