Judgement Day For Gulf Keystone, Binary Event Trading & more pain for Mr Cawkwell!

3 mins. to read

The last look on the Spreadbet Magazine blog for Gulf Keystone (GKP) was on July 6th when I made some typically cheeky comments regarding the sale of 10 million shares of the company by CEO Todd Kozel just a couple of months before. The view then was that ahead of the judgement due over the Excalibur claim, that this might not have sent the most clear signal to shareholders in terms of whether they should chance their arm or not on a decision that could swing the stock by say 30% in either direction.

Also at the beginning of July, I did stick my neck out over where shares of Gulf Keystone may head in the near term given the approach of D Day, which was at the time supposed to be by the end of August. Link – http://www.spreadbetmagazine.com/blog/zak-mir-and-gulf-keystone-in-the-garden-of-eden.html

I for one would not have appreciated the extra two weeks wait if I was fortunate enough to be a sizeable shareholder. The call back in July was that courtesy of the “Eve and Adam” chart pattern for the Iraq focused explorer, that we were looking at a possible significant move to the upside. This was something which stuck in my mind as even my predecessor as Editor of Spreadbet Magazine, who knows about everything from Alopecia to Meteorology (as I do), had not heard of this golden charting configuration. In fact, you can read about it in The Encyclopedia of Chart Patterns by Thomas Bulkowski or Master Swing Trader by Alan Farley.

As I said in July,  “the average rise after such a formation is delivered can be as much as 35%. This would suggest a return to autumn resistance above 220p.”  We have, I am pleased to say, been treated to an intraday high of 240p so far this afternoon in the wake of the judgement in favour of Gulf Keystone. Without gloating too much, I also covered the stock in my Research Bite in early Aug in which I re-iterated my 220p target (here’s the latest and in which I got Solgold correct right to the day too with a doubling in the stock price there!) 

I want to take a step back self back slapping however and do want most “pundits” would not do. That is ask the question as to whether any credit at all can be taken from the July buy call on Gulf Keystone? Statistically, from a charting perspective, it was one of the best set ups in the book – literally.

However, would it be wise to take a punt on what is essentially a binary event such as a court ruling? I would actually say, probably not. The best example of a situation in the recent past where everything went totally pear shaped was would be Potash miner Sirius Minerals (SXX), where we were supposed to have had the planning consent for a £1bn mine already in the bag by the end of July. Instead, the shares have more than halved after the binary event went the wrong way…

True, a stop loss at 20p may have prevented the pain becoming a nightmare, but hand on heart a binary event bet really does not seem to be the best way of investing. 

Nevertheless, I cannot promise that the next time there is a big wait on a much followed company and a high probability charting set up, the message in the form of the target and the stop loss will not be passed on to Spreadbet Magazine readers! Make sure you register to receive our Research Bites.

I guess for our predecessor editor, aside from his publication getting matters correct, the real bonus today is his old friend ol Caawky and his stated bear stance in GKP a few months ago – IF he traded then he’s in another world of pain today..!

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