By Zak Mir | Wednesday 5 August 2015
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from ShareProphets). I have no business relationship with any company whose stock is mentioned in this article.
If you want me to analyse a stock for you just drop me a line at firstname.lastname@example.org - Today I look at MX Oil (MXO), New World Oil & Gas (NEW), Oilex (OEX), Sefton Resources (SER), the "dream portfolio" of the man who claims to be better than Warren Buffett, Mr Chris Oil
MX Oil (MXO): Above 200 Day Line Suggests Initial 6p Destination
I was delighted to welcome MX Oil to ZaksTradersCafe on July 13 to tell the market face to face of the wonders of the new deal it had managed to strike in Nigeria at a bargain basement price. In addition, the “face to face” interview with MX Oil Chairman Andrew Frangos has to count as one of the most impressive presentations by a company I have been involved with.
In terms of what we are now seeing on the daily chart of MX Oil, while the pullback over recent weeks has been somewhat disappointing, there are still a couple of significant technical positives. The first is the way that support has thus far come in above the 200 day moving average now at 2.89p, as well as the floor of a rising trend channel from January at 3.1p.
The view at the moment is that provided there is no end of day close back below the January line one would be looking to a 2015 resistance line target at 6p as soon as the next 1-2 months. At this stage only cautious traders would wait on a momentum buy trigger such as an end of day close back above the 10 day moving average now at 3.69p – before going long.
New World Oil & Gas (NEW): Last Chance Saloon Support Zone
As is evident from the daily chart of New World Oil & Gas over the recent past, this has not been a situation for widows and orphans, or perhaps those with a heart condition. The reason for this statement largely centres around the sharp rally and then decline of May, with the real pain here coming in with the massive unfilled gap to the downside from around the 0.25p level, and just below the 200 day moving average at 0.24p currently.
The fact that there was no perceptible attempt to fill the gap in subsequent weeks, and indeed, given the way that all the near term moving averages have been falling over the past month, really does not paint a pretty picture from a technical trading perspective. Therefore we are forced to conclude that even after all the losses for the stock, talk of a sustainable recovery could be premature.
That said, we do have a “last chance saloon” support line from April, with the line in question running through the 0.05p level, something which may explain why the stock has been finding a modicum of intraday support towards this zone in recent weeks. However, the view is that this falling support line from May, as well as the former April support at 0.055p could be providing a lifeline to the bulls in the near term. But we would really need to see clearance of the last July peak at 0.07p on an end of day close basis before being able to call the bottom for New World Oil & Gas.
Oilex (OEX): Higher July Support Could Be Signficant
Oilex looked as though it could have been one of the more exciting small caps plays for 2015, especially in March this year, with the recovery of the 50 day moving average, then towards the 2.2p. In fact, there was a decent move to the upside after this recovery signal was delivered, with a journey towards the 4.5p plus level, well before the end of that month.
This not only took out the November / December peaks, but did so via a gap to the upside above the 20 day moving average then at 2.5p. All of this went to suggest that we were at least looking at a robust intermediate recovery, even if it would not prove to be strong enough to kill what had been an extended bear run for the stock. Indeed, the new phase to the downside after the big rally attempt was delivered after persistent attempts at clearing both the former 4.25p resistance and the 200 day moving average falling at 3.5p by mid June.
Unfortunately, since that time we have suffered a 50 day / 200 day moving average dead cross sell signal which is still pressuring the stock. The main hope for the next 1-2 months though, is that the higher July floor at 1.65p versus February at 1.58p will be held, and that the 200 day moving average now at 2.83p could make for an intermediate target over the next 1-2 months while 1.58p is not broken.
Sefton Resources (SER): Head & Shoulders Reversal
It is difficult to know where to begin as far as the charting picture at Sefton Resources, but it may be best to make a review of what has happened here on the daily chart over the recent past in order to get a full appreciation of this high profile minnow. The start of the latest technical phase here arguably began with the golden cross buy signal between the 50 day and 200 day moving averages, something which led to the stock to peak out towards 0.4p that month.
However, since then we have suffered multiple sell signals (other than Chris Oil saying buy as he himself sold), with the first and perhaps most important being the way that the March – April price pattern mapped out a head & shoulders reversal. This negativity was backed by the as yet unfilled gap down through the 50 day moving average then at 0.21p.
Things did not get any better following this with confirmation of the new bear run provided by June’s as yet unfilled gap to the downside. Overall, it is now possible to draw a falling trend channel on the Sefton Resources daily chart from as long ago as October, with the floor of the channel heading as low as 0.02p. This implied target may seem overly negative, but it remains valid while there is no end of day close back above the 20 day moving average at 0.07p.
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