Although I'm a bull on IOC, realistically the stock chart indicates that IOC is in very dangerous territory.
The chart can be interpreted as an Ascending Triangle, supported by the 200-day SMA and now the 50-day SMA, which today crossed slightly above the 200-day SMA. If the formation is really an Ascending Triangle, this formation should resolve itself in the NEAR FUTURE by breaking out to the upside on a surge in volume.
On the other hand, one could interpret the formation as a topping formation, with the prospect of an imminent roll-over to the downside, with the 20-day SMA breaking below both the 50-day SMA and 200-day SMA and the price weakness taking the whole complex down.
Clearly the resolution will come as a result of the MARKET'S REACTION to pending DEAL NEWS. It is not automatic that the market will react positively to what many might call "good news." This kind of reaction has happened time and again to IOC news announcements.
It seems quite strange that IOC is not in a "buy the rumor" type of rally. What comes next is usually a "sell the news" reaction.
Despite all the anticipation of a positive reaction to what is likely to be an "accretive transaction", the accretion may not come immediately and may be spread out over the many years of construction to follow prior to positive cash flow. Remember "later, later, rather than sooner?"
It is quite likely the pending news will contain some surprises. The uber bullish longs may also be in for a surprise to their financial detriment.
My suspicion is that there are many, many allegedly uber bullish longs who just want to get out -- and they'll be selling into whatever kind of post-announcement rally that develops. I, for one, surely hope they get their wish. If they don't, the exit door will be very crowded and some will get trampled.
Conversely, maybe IOC management and the torch-the-short cultists will get their wish for immolation of the shorts.
Bring on the DEAL.
well then, its not a good time for them to go out on rebid and toss all the bids received. supermajor bids tossed in the trash? super!
Make the calls and check. When you hear stuttering at the other end, you will have your answer. And your NYC "announcement" info to boot.
"Very Dangerous Territory"? Seriously? Ascending Triangle? VS, with all due respect your thesis is off base in my view.
1) Big buyers know this stock is manipulated daily, and I would certainly expect them to be gun shy about stepping in while the shorts have the opportunity to work it as they do every day. Does that make sense to you?
2) We have been through this before where we are in a holding pattern waiting for news. big buyers very likely would rather buy post announcement rather than buy now and watch the manipulation continue as they hold. They may be t5aking small bites here and there, but a good deal announcement will likely spark a seriously crazy flurry of buying.
Your headline is a bit sensational don;t you think? "Very dangerous territory"? And I dont think the market is telling us anything about the deal. throw out all of your rules when it comes to IOC VS. You should know this by now. it is completely different story and potentially huge upside, but the buyers want to see the deal IMO.
Thank you in advance for your glowing comments about my astute comments.
Good luck longs
Sentiment: Strong Buy
With respect to your 1: There's some merit, but it might be more likely that large size owners are presently loaning out their shares in quantity and making money on the loan fees rather than reticence to buy when the ultimate result has been virtually assured by the analysis the SHU folks. Non-owners (or under-owners) may be holding back, but it is very strange behavior given the genius analyses and the fact that the market in general is making all-time highs.
With respect to your 2: The biggest announcement in the history of InterOil to-date, was most likely the A-2 result and confirmation following that of vast resources by GLJ. That announcement took place in late 2009 (and GLJ in early 2010). Exactly what did the stock price do prior to those announcements? Exactly what did the stock price do subsequent to those announcements? Your theory isn't supported by the evidence.
The point is that we're essentially looking for a BINARY EVENT -- either a good or bad deal -- and the stock price movement and technical readings derived therefrom are reflecting just that.
If, as all the geniuses are now predicting, there's a super deal or deals coming IOC's way, why is IOC underperforming the anticipation that preceeded the A-2 drilling results?
There is huge upside potential for IOC if the deal comes down as predicted by all the geniuses.
Unfortunately, it will be many years before the cash begins to flow back to IOC and partners from E/A and Gulf LNG.
It might be quite a while before the "huge upside potential" is reflected in the stock price.
Personally I hope not, but it is a distinct possibility.
That is why the shorts may have a few years to do their thing before they are burned at the stake -- and the longs to receive their rewards.
VS, you keep touting this technical #$%$ on a stock that is not run by technicals. Last time you were touting the great bullishness of the triangle formation, but now it's dangerous. In other words for a stock like IOC this analysis is worthless. Basically as worthless as most of your posts where you basically predict, good and bad, maybe this, maybe that.
And BTW, now that Byker has been proven to have not been in conflict or likely done anything wrong, when will you publicly apologize for something you started here on this board? Amazing you can start something like that, not apologize, then go right back to trying to fool people with your technical analysis.
Amazing that anyone gives you the time of day on these posts.
Sentiment: Strong Buy
Stocks are NOT "run by technicals." The technicals measure the condition of collective buyer/seller "action" on a stock -- as in "taking the temperature" of the patient.
Here's the full text of what I posted on another Yahoo thread re the latest on the Byker question:
"The originally-raised subject ot TRANSPARENCY certainly has something to do with IOC's on-going corporate communication philosophy and perhaps a small portion of some short claims.
"However, that issue was hijacked into the "conflict of interest" investigation, which subject related to Fuller, Calvin, and/or IOC has ZERO to do with any short thesis.
"At this point, all that really matters is the market's reaction to any deal announcement.
"Bring it on -- and let the debate get back to how to value whatever results."
Turn the chart upside down and tell me what that says.
I know this sounds sarcastic, but I'm actually serious.
Show me one person in the Forbes 400 that got rich reading charts.
Sentiment: Strong Sell
You're spot on. This chart formation in no way resembles a market waiting for a positive outcome decision. A disappointing press release could drive this to around $50, a positive outcome to about $90.
But both the daily and weekly charts are challenged here, the point and figure formation is bearish, and it's telling me the market is not expecting much upside...I hope I'm wrong.
Buy the rumor rally ? We did not even get a buy the news rally after receiving $50 million cold hard cash. The story of IOC is a drwn out one and nothing short of the announcement of the deal will do at this point. The desperate efforts of the shorts (borrowing shares at 30% interest !) certainly does not help.
We will never know how many uber bullish long wants out. My guess is those who wanted out had long gone. Short term, the shorts , not the longs, will push the share price lower.
You are correct that it will be several years before we see cash flow and one should apply a discount to the share price from 2016 back to 2013 to get a reasonable expectation of what the share price may be. One sleeps better if there is a road map. As for myself, I assume $ 0 - 200 millions upfront , no IOC funding participation in building the plant, $1-1.5 /mcf. Discount 25% per year backward from 2016 and I get a current share price of $ 75-115 and reaching 150 -225 eventually. I assign zero $ to everything else.
What I did not figure in the calculation is the size of the resources which may be a surprise , albeit a positive one.
Not far off the Westlake Securities valuation.
BTW, to me the most interesting aspects of the Westlake research piece were the revelations of the two parts of the valuation equations that would have the most influence on the IOC stock price:
1) The cost of capital -- and there was a very interesting presentation at how they arrived at 12% of the blended cost under the assumption of 30% equity/70% debt in the project capitalization; and
2) The LNG price at time of delivery.
On both counts, the discounted present value of IOC's future cash flows was quite variable -- demonstrated in chart and grids.
Other inputs (including plant cost overruns, initial SD prices, etc) were of much less influence.
PS Interestingly, the reactions to the latest hit pieces have been very muted, relative to prior plunges. There's quite a standoff in place that can only be resolved after the actual DEAL is announced, with enough detail to bring clarity to valuation inputs.
It should also be added that the Bollinger Bands are in a pinching formation, which usually leads to a substantial stock price more to resolve the indecision.
Prepare for a major move -- one way or another.
Why are the potential buyers sitting on their cash?
Do they doubt that the deal will be highly favorable to IOC's valuation?
I am a bit of a doubter when it comes to technical analysis, but the proof is in the pudding and I am willing to take your word for it. Has paying attention to this stuff helped you make any money day trading IOC? Just curious.
I have too many questions about your posts to articulate in one post so let me boil it down to 2 things:
1) I have asked many technicians over the last 5 years what they thought about IOC charts. Unanimously, they've all answered that techicals don't apply to IOC. Future price action was never predicted by techical analysis as the company has always been driven by news i.e Drilling success, offtake agreements, political developments, partnerships, etc. Additionally, the shorts manipulate the stock to keep a lid on the price in the short term. It thus creates false technical readings.
2) There is no news in the market. By and large the leaks have been plugged and there is an information void prior to a deal annoucement. Therefore, there are no expectations currently built into the price. Most of the longs are long term investors and are simply holding stock they've owned for quite some time. Same for the shorts other than short term manipulation attempts designed for profit taking or less expensive hedging (they're dumb but they're not stupid). Everyone awaits a valuation reset post sell down transaction.