“The Mir millions and Gulfsands Petroleum”

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3 mins. to read

I have been reliably informed by the former editor of Spreadbet Magazine that the assorted Titan Funds – which are his new day job – have got off to a very solid start. This is mildly upsetting given that the “Mir millions” have not yet been deployed there.

However, it may be the case that there are financial rewards to be reaped from the current setup at Gulfsands Petroleum (GPX), where the shares are attempting a “bear trap” rebound from below the former June support at 64p.

While it has to be admitted, the initial pullback here from the former 2013 support/50 day moving average at 65p is not helpful in the first instance, overall there would appear to be a decent technical backdrop.

This is derived from the “double bounce” off an April support line in the RSI window during June and July-the result of bullish RSI divergence. There has also been a rebound off the floor of a falling one year descending price channel from July last year with its support line projection heading as low as 50p.

Presumably, the 50p zone is the worst case scenario on the downside if Gulfsands shares are not able to rehabilitate themselves. But it is still the case that as little as an end of day close back above the 50-day line could deliver an implied top of 2012 price channel target/200 day moving average retest around the 90p level. This would clearly be decent upside from current levels and may be seen even if the breakdown for the stock since the summer of last year continues after that.

CLEAR DISCLOSURE – TITAN INVESTMENT PARTNERS HOLDS A POSITION IN ITS FUNDS IN GULFSANDS PETROLEUM

I think it can be said quite fairly that shares of President Energy (PPC) are sporting a quite similar near-term configuration to that seen above at Gulfsands. What helps the recovery argument is a combination of an extended RSI support line triple tested since the end of January, the higher August support versus July, as well as a tentative break back above the 50-day moving average now 17p, a feature which has capped the price action since the end of January.

Indeed, the hope over the near-term is that the break in the RSI oscillator back above neutral 50 to stand at 56 will provide enough of a boost as a leading indicator to potentially deliver an initial retest of the 200-day moving average at 21p.

At this stage only sustained price action such as a weekly close back below this month’s initial 16p support zone is seen as being negative enough to delay the upside, and which is expected to be achieved over the next 6 to 8 weeks.

One of the strongest charting signals around, and one which has proved itself time and time again, is that of the gap fill failure. This is what bulls of Solo Oil (SOLO.L) were treated to at the beginning of this month with the July gap to the upside at 0.26p. While this may not sound like much, it does have great technical significance-as long as the gap is not filled, and we should regard Solo Oil with the greatest bullish reverence. Indeed, if you add in the way that since the end of June there has been a triple rebound off the floor of a wide rising trend channel from the middle of last year at 0.3p currently, we have a decent risk/reward set up. At this stage, while the 2012 uptrend line is held, the upside here could be as high as the one year resistance line projection heading to 0.7p as soon as the next 2-3 months.

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