Today is a big day over and above it seeing the publication of Spreadbet Magazine’s August edition. Apparently it is “National Orgasm Day” (true!) and it is not a marketing ploy by Ann Summers to highlight the miseries of faking it (not that Mrs Mir would know this!).
But at least as far as second line oil stocks are concerned, there is usually very little reason for anyone to pretend to dial up quite that level of excitement in this part of the stock market, as it usually goes with the territory. What can be attractive to investors with the second tier stocks is that many companies have reached enough of a critical mass and so you are not at risk of a 100% loss as you might be in the small caps space. However, you could still be sitting on the next Royal Dutch Shell (RDSB), or perhaps more realistically, the next Tullow Oil (TLW) or Cairn Energy (CNE).
Starting with Ophir Energy (OPHR). What with a high profile hedge fund being short of the stock in the recent past, it has been enough to ensure that for 2013, this is merely a sell into strength situation. Indeed, it was surprising that even after March, April and May all delivering bear traps that no lasting floor was made for the shares here. Even more of a pie in the face for the bargain hunter is arguably the way that even in the wake of the late June bear trap and higher July low, this is a recovery which looks tentative to say the least. Nevertheless, as we go into August, we do have a red April trend line trap buy signal, with this support line running level with the 50 day moving average at 378p. One would be happy to go for a toe in the water purchasing here on that basis and use a stop loss as tight as an end of day close back below the last July intraday floor at 370p. The upside above 370p should be post May resistance / 200 day moving average at 424p, perhaps on a 1-2 month time frame.
Although it would be difficult to argue that Soco International (SIA) shares have displayed anything more or less complicated than an erratic range on the daily chart since December between 340p and 410p, there is the hint of a rising trend channel from this time last year with its floor running through 355p. The implication is that any weakness towards the sub 360p zone can be regarded as a buying opportunity with the recent sub 360p dive for June / July implying that we can look to 400p plus yet again over the course of the rest of the summer.
I have saved perhaps what could be the best/most straightforward situation until last as far as this sweep of middling oilers is concerned. With Premier Oil (PMO), it can be seen how the price action has shrunk within a tight flag formation after the Adam & Eve bear trap reversal towards 330p during June/July. The implication of this, is while we have no end of day close back below the floor of the flag at 355p, that the March resistance line at 390p is the 4-6 week price target. A good money management point would be just below the falling 50 day moving average at 352p.