zak mir on RKH, Globo and Amara Mining

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3 mins. to read

I guess it can be said without fear of contradiction, that those investors with a penchant for buying into Falkand Islands oil & gas explorers such as Rockhopper (RKH), are probably the kind of people who enjoy going to the dentist or receiving threatening letters from HMRC!

This point was underlined yesterday in the wake of yesterday’s sharp share price collapse in RKH’s case as the private investor favourite confessed to tax issues with the Falkland Islands authorities. Not helping either was the revelation from farm out partner Premier Oil (PMO) has delayed the start of its drilling campaign, meaning that this classic jam tomorrow situation will see the likely payoff come in now  for 2018, as opposed to the 2017 that one could pencil in until yesterday.

Is this a killer blow over for Rockhopper shares? Well, probably not. Firstly, the company has a “barmy army” of retail supporters who will most likely wait until the 12th of Never for the black gold bonanza promised here, and second it would appear that multi year lows at and just below 120p are probably the limit as far as the damage to be done in the near term here. Probably the best technical guide as to whether Rockhopper is headed for a sustained breakdown would come from an end of day close below the intraday low of Thursday at 111.75p.  While this is quite a wide trading trigger to the downside from yesterday’s close at 120p, it seems appropriate to me given the way that yesterday’s share price reaction was probably overdone, at least in the first instance.

From a situation which could yet be something of a feeding frenzy for the bears, to a chart which appears to be like a coiled spring as far as the bull argument is concerned. This comes in the form of an extended base, a W shaped reversal and a bull flag above previous resistance from July this year at 12.78p. Indeed, the latter aspect is very similar to the way that Gold itself has delivered a bull flag above former $1348 July resistance. But, in the case of gold mining minnow Amara Mining (AMA), we appear to have a situation whereby after a consolidation within a 16p – 20.85p range, one would expect now to see a sustained revival. This would hopefully end a meltdown for the shares which has been in place since the autumn and over 75p.

Indeed, it is worth noting that the shares were a highly backed bull prospect late last year, but that none of this enthusiasm managed to rehabilitate the situation – until now. Indeed, it is the extended delay which now makes it easier to be that much more positive on the price action here. At this stage only an end of day close back below the flag formation at 16p would negate the bull argument. Conversely, the upside here on a 4-6 week timeframe could be all the way towards the present position of the 200 day moving average at 35p.

We go from a stock which seems to be a prime recovery situation to one in the form of Globo (GBO) where the shares of the technology developer have already been in an extended bull run. In fact, it would appear that for August Globo is within a bull flag continuation signal with  the floor of the flag above the former June 50p peak.  The likelihood is that while there is no end of day close back below the 50p level we could be treated to a March price channel top peak at 65p as soon as the end of next month.

CLEAR DISCLOSURE – TITAN INV PARTNERS AND EDITORIAL STAFF HOLD POSITIONS IN AMARA MINING AND ROCKHOPPER


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