Zak Mir blog snippet – GKP & the 99% club
The 99% Club
I have to confess that I would have thought that as a group, the various spread betting companies would be beating a path to my door and/or worshipping me as a God. Why? Well, quite simply given the almost evangelical zeal with which I have championed the twin causes of short term trading and technical analysis since the start of this century. Unfortunately, this is not the case, something which can only be attributed to a rare mix of perceptive talent mixed in with a frisson of maverick calls and perhasps negatively, my renegade tendencies that have sadly afflicted me over the past 46 years… All say, aah didums!!!
That said, in recent weeks I have rediscovered the appeal of the analysis delivered in by one leading spread betting company’s Insight package. The highlight here is undoubtedly both the heat map of what their clients are trading, as well as the percentage of long & short positions in individial stocks and markets.
The most memorable stat for me in the recent past was at around 2pm on the Friday Gold tanked by nearly $100 early this month. 88% of this firms clients were long. Presumably this road led to a place called Margin Call City – a place no client ever likes to go! I know of at least a few former clients who are now doing the equivalent of washing the dishes in order to make good what they owe. Oh dear…
But, the intrigue to me now is provided by one of the most widely held stocks on the UK market – Iraq focused oil explorer – Gulf Keystone (GKP). Here the statistic that flies out at me is that 99% of those holding a position were long when the shares were standing at 180p, 99% at 170p, 99p at 160p and of course now in the 140p’s. The question I presume is when are the members of the 99% Club are going to blink? And perhaps more pertinently, at what level does the “margin” bogey bite? Word is that it is around the 120p level and this ties in with my analysis below.
The charting position is slightly better after today’s bear trap rebound from below the 140p 2012 June low (from 131.5p). On this basis, the real reason to panic would be if we were handed an end of day close back below today’s 131p intraday low. Nevertheless, the pattern on the daily chart with all the moving averages falling is not exactly healthy. Five bull traps through the 200 day moving average over the past year do not help, and at least whilst we remain below the December 161p floor, the March falling price channel target is 70p as a worst case scenario.
The question you have to ask yourself if whether 99% of retail punters could have got Gulf Keystone wrong?
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