GKP - Research

Thought i'd review the charts again!

Monthly:
Not much to report here. Falling wedge, clear downtrend, support in the 47.50 area


Weekly:
Much more interesting. Same formation, long term support in 49 area then 34 for the wedge, RSI resistance held once again. RSI support looks to correspond to 34 support.


Daily:
Trendline supports at 52.50 and 45.25. Horizontal at 48.50. RSI approaching short term support line (certainly touched today), so we will see if it holds. Long term RSI support looks to correspond to 45.25 long term trendline support.



In summary, volume has been low recently (since the last rise to 85). Time for volatility and volume approaching IMO.

SP touched the first daily support area today. If this breaks to close then all timeframes indicate a break of 50 which threatens the 48.50 horizontal support.

So the question is how low will this go? I see a continued drift lower, certainly to 45 and with 34 a possibility.

It's a long time until the financials come out so crude oil will remain the driver here. The $60 talk has turned quickly to sub $40. IMO if the talk is there then the traders will target those levels, particularly if US stockpiles continue to grow.

GL
F4T

Hi Diver,

I use fibs as follows:
- 23.6%, 38.2% & 50% retrace = normal retraces as trend/move continues. The shallower the retrace, the stronger the trend.
- between 50% and 61.8% retrace = trend/move in danger of failing/reversing
- more than 61.8% = likely/high risk of 100% retrace of move. Think of the mountain climber! 61.8% is the last point of no return.

I believe that the above is usual for technicians.

I agree with your other points.

Cheers
F4T

dl.dropboxusercontent.com/u/7238706/GULF%20KEYSTONE.png

A fairly standard expectation for a retrace is between the 50 - 61.8% levels; that said it would be normal to expect a retrace to a support in that area - and so we get 57. Of course, there is nothing set in stone and the sp certainly doesn't have to stop there. Obviously, if the 48 fails the downtrend continues and things are really bleak....

Hi SE,
you can have a penetration of trendlines intra day but the close is the most important point, so a rise above it to 70 is not a break. Also, a close above can also fail.

I gave a high of 83 on the move up from 42 and my view has not changed. It made 85 so it was a good call. Above that 89.50 is strong resistance, so we now have both 85 and 89.50 as resistance within a few ticks so a break through will need a lot of strength. Where will that come from?

You have to always have an eye on fundamentals whatever the charts say. If you trade long or invest, there has to be fundamental value in the stock or people won;t buy it. If you trade short there needs to be an inherent weakness in the stock to support that stance.

I have said it before and will so again; Firstly, the CPR (at $100+ oil) gave an asset value of 68p. Forget all the bn's OIP BS that went before. It is irrelevant to analysts and the city. Until the reserve report changes then that is the benchmark for the stock no matter how much they produce. Oil is now heading for $40, so the DCF value will be less on a lower forward oil curve.
Also, GKP has a high finding cost and (i think) a high opex/bbl number, so what is their b/e? This is what the analysts will be looking for when the annual report comes out. The RNS re: power/fuel was all about making the market believe that their costs are low. I don;t believe it. Heavy oil, sulpur, trucking costs, security, above average salaries. It all points to high opex.
If opex/bbl is lower than anticipated, expect a rise but not above the resistances in the 80's. If opex/bbl is high IMO this will crash as oil is set to stay low at least until the summer.

The annual report will be interesting and a challenge for the auditors given the management of this company.

Remember, 57 is the 61.8% fib and this was tested today. After that 48.50 is crucial. We have had three lower highs and three lower lows since 85. This is a short term downtrend in addition to the long term one.

My advice is wait for the annual report and react to that.

GL
F4T

Slow Eddie wrote: Was just wondering F4T if the strong downtrend line you have in blue is broken by going above to 70 or more on reasonably strong move would that mean the downtrend is then broken? And a new trend forming?
And can I also ask if your doubts about it going above high 80's ( to which I listen with great attention) are chart based or based on what you mentioned about fundamental values.
I do find it interesting the relation or non relation with fundamental values as I believe most chartists discount them entirely.

For real strength to come back to GKP this has to break above 85p. This is the most important level currently as the 123 low breakout point and the 200EMA is at the same spot. 2 levels of resistances together so strong resistance. A break above this level should be powerful and signal a change in trend.
Early entry could be a break above 71 but with tight stops as this area is roughly where the main down trend line is(69), well below this but best to go above the strong resistance for entry.



dl.dropboxusercontent.com/u/4899609/gkp6thjan2015.png

Resistance..69.75(trendline),,,,71,,,85(200ema and 123 low)
support....50.5(trendline),,,,48.5,,42.5(very strong support)

Was just wondering F4T if the strong downtrend line you have in blue is broken by going above to 70 or more on reasonably strong move would that mean the downtrend is then broken? And a new trend forming?
And can I also ask if your doubts about it going above high 80's ( to which I listen with great attention) are chart based or based on what you mentioned about fundamental values.
I do find it interesting the relation or non relation with fundamental values as I believe most chartists discount them entirely.