Bullish Short-Term, Trade Cautiously: This post will come in two parts. The first I will explain the most recent trade I exited yesterday, 05/11/16 using technical analysis from the information provided the day prior; and secondly I will review the fundamentals of the company and speculate the short-term outlook into the next two crucial months that lays ahead.
The Setup:
Lets start off with Support and Resistance levels. I set resistance at a previous high of $4.36-4.38, take notice of multi-tops on open May 3, 4 5. I figure, retracing back to this testing point will be my gain. Support levels established on May 9th. This day is critical for the setup. The 9th opened on new lows and tested a support level from April 19th and 26th at roughly the $3.70-$3.75 mark. 10:30 AM to 11:00 AM on the 9th was rough on the Bulls, and Bears had all to gain. Tier 1 Support level established here at $3.75 Later on in the day on the 9th, downward momentum death-dropped the price to $3.54, thus I established this as Tier 2 Support of $3.55 when it began retracing to neutral territory. Overall, despite the 9th performing badly, it signaled trend reversal and began plotting the trend-lines.
Initially, I thought the overall trend is just going to be an ascending triangle waiting for the resistance breakout. On 05/05/16 it broke the dashed blue long term trend-line. (Yellow Circle) No hope. Bearish Elliot-Wave? Nope. So, then maybe perhaps it is an expanding triangle pattern? (Resistance & Solid Blue Downtrend). Kind of... Upon further inspection it was so simplistic I missed it. Ascending wedge and expanding triangle combo. Reverse pennant/flag pattern. The volume is decreasing on each gap day, the sellers are in control and a significant portion of S/RSI is over-bought.
At 3:45 P.M. on 05/11/16 I entered at $3.95. I followed the sellers (sharp drop in S/RSI in power-hour) and I expected overnight to gap-down and boost on the ascending wedge. This is inherently risky because I knew I had to dump quickly in the morning. Stop-loss of 0.12 cents per share. I wanted 0.19 to 0.20 cents per share. Optimistic target of 0.40 cents. Hey! You can always dream. I overslept pre-market. My auto-alert started to exit my shares at $4.11. I had one block exit at $4.15. I missed top, but lucky did not stick around to eat dirt afterwards.
Short-Term Prospectus: - Paraphrasing from Motley Fool + My own thoughts.
Tread cautiously. This past Tuesday, 05/10, U.S. equities had their biggest gains in two months after the Chinese government cut interest rates to boosts it's economy. All industrial sectors of the S&P 500 closed higher, with some of the biggest gains in energy.
USOIL
&
UKOIL
prices are holding steady. In addition to news stories, I would also speculate that the fire in Fort McMurray creates a short term oil production shortage and increased demand in the Americas. Last year or a few years ago if I recall, the company launched its newest fleet of drilling vessels that are top of the line in cutting edge technology compared to other offshore drilling companies.
On the Flip-side: According to John Persinos,
"The analyst consensus is that Seadrill's adjusted earnings per share will come in at 39 cents, compared with 71 cents in the same quarter a year ago. Adjusted E.P.S for the next quarter is pegged at 38 cents, compared with 79 cents in the year-earlier quarter all of 2016, E.P.S is projected to reach $1.30, compared with $2.27 in 2015."
Terrible projections for earnings growth. The company also has debt-to-equity ratio of 1.17, tallying nearly $11.1 Billion of interest bearing debt, $8.3 billion of which is secured largely by liens on drilling vessels. Lucky, it has recently negotiated a deal to refinance it's debt.
The Setup:
Lets start off with Support and Resistance levels. I set resistance at a previous high of $4.36-4.38, take notice of multi-tops on open May 3, 4 5. I figure, retracing back to this testing point will be my gain. Support levels established on May 9th. This day is critical for the setup. The 9th opened on new lows and tested a support level from April 19th and 26th at roughly the $3.70-$3.75 mark. 10:30 AM to 11:00 AM on the 9th was rough on the Bulls, and Bears had all to gain. Tier 1 Support level established here at $3.75 Later on in the day on the 9th, downward momentum death-dropped the price to $3.54, thus I established this as Tier 2 Support of $3.55 when it began retracing to neutral territory. Overall, despite the 9th performing badly, it signaled trend reversal and began plotting the trend-lines.
Initially, I thought the overall trend is just going to be an ascending triangle waiting for the resistance breakout. On 05/05/16 it broke the dashed blue long term trend-line. (Yellow Circle) No hope. Bearish Elliot-Wave? Nope. So, then maybe perhaps it is an expanding triangle pattern? (Resistance & Solid Blue Downtrend). Kind of... Upon further inspection it was so simplistic I missed it. Ascending wedge and expanding triangle combo. Reverse pennant/flag pattern. The volume is decreasing on each gap day, the sellers are in control and a significant portion of S/RSI is over-bought.
At 3:45 P.M. on 05/11/16 I entered at $3.95. I followed the sellers (sharp drop in S/RSI in power-hour) and I expected overnight to gap-down and boost on the ascending wedge. This is inherently risky because I knew I had to dump quickly in the morning. Stop-loss of 0.12 cents per share. I wanted 0.19 to 0.20 cents per share. Optimistic target of 0.40 cents. Hey! You can always dream. I overslept pre-market. My auto-alert started to exit my shares at $4.11. I had one block exit at $4.15. I missed top, but lucky did not stick around to eat dirt afterwards.
Short-Term Prospectus: - Paraphrasing from Motley Fool + My own thoughts.
Tread cautiously. This past Tuesday, 05/10, U.S. equities had their biggest gains in two months after the Chinese government cut interest rates to boosts it's economy. All industrial sectors of the S&P 500 closed higher, with some of the biggest gains in energy.
USOIL
&
UKOIL
prices are holding steady. In addition to news stories, I would also speculate that the fire in Fort McMurray creates a short term oil production shortage and increased demand in the Americas. Last year or a few years ago if I recall, the company launched its newest fleet of drilling vessels that are top of the line in cutting edge technology compared to other offshore drilling companies. On the Flip-side: According to John Persinos,
"The analyst consensus is that Seadrill's adjusted earnings per share will come in at 39 cents, compared with 71 cents in the same quarter a year ago. Adjusted E.P.S for the next quarter is pegged at 38 cents, compared with 79 cents in the year-earlier quarter all of 2016, E.P.S is projected to reach $1.30, compared with $2.27 in 2015."
Terrible projections for earnings growth. The company also has debt-to-equity ratio of 1.17, tallying nearly $11.1 Billion of interest bearing debt, $8.3 billion of which is secured largely by liens on drilling vessels. Lucky, it has recently negotiated a deal to refinance it's debt.
Comment:
Using the dashed blue and red lines, they form a ascending/rising wedge pattern. Sure enough, as shown in the chart, it confirms my initial thoughts that it had an impending crash. I am preparing and looking for a spot where the reversal will end and trend back north.
stockcharts.com...school/doku.php?id=chart_s...
stockcharts.com...school/doku.php?id=chart_s...
- Delays the maturity of $950 million in total debt due in June and December 2016 to December 2016 and May 2017.
- Delays the maturity of $2 billion debt of subsidiary North Atlantic Drilling Ltd. from April 2017 to June 2017.
- Agreed to not draw any more cash from its revolving credit facility and would retain at least $250 million in liquidity.
June and July will be the make it or break it for both NYSE:CHK &