Two weeks ago, I made a brief post stating that I pulled out of BP and was going to stay clear (at least on the long side) because I had some pretty good indicators that told me shares were headed for a new low, below the $29 dollar mark. http://www.avaresearch.com/article_details-567.html
On Friday shares fell just below $27.
Other than a possible short-term bounce (which I would not try to play if I were you), I expect shares to continue further.
In short, even if you are an optimist, I don't see shares moving up (at least trendwise) anytime soon. I can tell you that based on developments over the past 3 weeks I have some serious concerns which have clouded any amount of certainty I had previously.
At this stage, there is a good chance BP will carve up a good portion of its business and sell it off, not so much due to financial pressure, but political. I would not expect this to happen anytime soon, but I would say there is a better than 50:50 chance this could happen over the next 2-3 years.
I think (my guess) BP is in informal discussions with some Wall Street firms to assess these possibilities. This suspicion is not based on rumor nor is it based on fact.
Furthermore, in contrast to my previous expectations, I am convinced that any potential market sell-off would take BP shares down with it because the uncertainty is so high on the street that funds are not likely to see any price as undervalued at this point. When uncertainty is very high, it is almost impossible to detemine valuations.
As a result, I cannot see myself taking interest in a long position anytime soon. In fact, I do not know if there is any price I would buy shares right now due to the high level of uncertainty.
The shorts continue to look much better.
Remember, previously I was fairly optimistic on BP, and I laid out a fairly reasonable entry point based on my level of certainty at that time.
Things are much different now. You are best to stay clear and let developments play out, unless you have a better gauge of certainty than me, which might be the case because mine is now very low. There are too many complicating factors at play right now.
Keep in mind I do not watch TV, so I am not exposed to the drama that I would imagine consumes some channels. My analysis is based on other factors.
See Our Copyright Policy
Copyright © 2008-2013. AVA Investment Analytics, LLC. All Rights Reserved.
Restrictions Against Reproduction: No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, scanning, or otherwise, except as permitted under Section 107 or 108 of the 1976 United States Copyright Act, without the prior written permission of the copyright owner and the Publisher.
These articles and commentaries cannot be reposted or used in any publications for which there is any revenue generated directly or indirectly. These articles cannot be used to enhance the viewer appeal of any website, including any ad revenue on the website, other than those sites for which specific written permission has been granted. Any such violations are unlawful and violators will be prosecuted in accordance with these laws.
Article 19 of the United Nations' Universal Declaration of Human Rights:
Everyone has the right to freedom of opinion and expression; this right includes freedom to hold opinions without interference and to seek, receive and impart information and ideas through any media and regardless of frontiers.
More On Fundamental Analysis