11 weeks to Christmas.....Petroneft Resources

Thursday, 11th October 2012 12:13 - by Moosh

PTR has fallen from grace after becoming overbought..

at 70p+ but the bottom of the downtrend hadn’t really appeared – it threatened a few times but with institutional investors selling in large chunks and private investors getting bored of the constant price drops and probably running out of money to throw into PTR, apathy eventually set in. I’m not afraid of the apathy of others and it is said that one should be greedy when others are fearful, so I pick up the story here with PTR having already bought at previous prices before 26 April 2012.

1. 26 April 2012                       BUY 1500 @ 8.2p                              total = £129.48
2. 29 June 2012                      BUY 1500 @ 6.65p                            total = £108.25
3. 7 August 2012                    BUY 1500 @ 6.1p                              total = £97.67
4. 16 August 2012                  SELL 1941 @ 7.6p                              total = £142.27
5. 20 August 2012                  SELL 2183 @ 9.325p                         total = £198.31

Total bought      4500 shares for £335.40

Total sold             4124 shares for £340.58

Therefore 376 shares remain, which at 9.325p, are worth £35.06. Including the £5.18 extra from the total sold, the total return (at 9.325p) would have been ~12%. So how did I justify the trade timing in this short term investment?

1. 26 April 2012                       BUY 8.2p

My previous PTR buy was at 9.7p and this buy was made on a former averaging down system – 8.2p was more than 10% lower than 9.7p so I bought some more.

2. 29 June 2012                      BUY 6.65p

This was bought about the time of the hourly kumo breakout at the end of June 2012 after hourly volume oscillator (VO) had climbed up through -1. The way I see the kumo breakout is ‘an attempt to trend’ on an intraday basis. A decent short term trend usually lasts a few weeks and usually has an intraday hourly Elliott wave associated with. This kumo breakout only managed to creep up to ~7.625p before dropping again to a lower low below 6p into August, despite the rather large volume which entered PTR on this kumo breakout.

3. 7 August 2012                    BUY 6.1p

A further hourly kumo breakout after a VO cross-up through -1 appeared so I decided to (tentatively) buy a few more – this time the attempt to trend resulted in a prolonged uptrend during which the price remained above the hourly cloud, and on a daily chart pushed up through the daily cloud to give a daily kumo breakout too.

4. 16 August 2012                  SELL 7.6p

The sell price exceeded the 2nd resistance level (R2, pivot point theory) for that day so I decided to recoup part of the capital from the under 7p buys.

5. 20 August 2012                  SELL 9.325p

After a remarkable price move up on 17 August 2012, well beyond the R2 level for that day (which was ~7.96p), there was a further price push to 9.75p at market open on 20 August 2012 and I got slightly nervous for the short term since the price had risen in this run from 5.625p to 9.75p (~73%) over a few weeks and even pushed through the 100 day exponential moving average at ~8.375p, so I sold enough shares to get back the rest of my capital to leave a ‘freeholding’ of 376 shares alongside the higher priced buys from previous trades.

Obviously you might be reading this and be wondering why I’m happy with a 12% return on a 73% rise. Remember, for the time and amount of capital invested, 12% is more than I would get from a bank with those same terms, so yes, I should be happy with that performance. During this uptrend, an RNS appeared, and so did the ‘sell-on-news’ investors, but after a few days the uptrend just continued up as if the RNS didn’t happen – the trend was already established by then. I thought that was truly remarkable especially as PTR was rising from a long term price low and that sentiment still really hadn’t turned around with the majority of investors. PTR are currently on a ramped up drilling campaign so I do suspect that this increased activity, with potential to increase revenue generation from successful wells has something to do with buyers coming back to PTR.

The Writer's views are their own, not a representation of London South East's. No advice is inferred or given. If you require financial advice, please seek an Independent Financial Adviser.