9 weeks to Christmas.....Empyrean Energy

Thursday, 25th October 2012 14:09 - by Moosh

Since the price peak of ~9p in Spring 2012 I decided to leave EME alone for a few months to see how low it would go and reassess the situation when the next VOh appeared once daily VO had become negative again.

This happened in early Summer 2012 and since then I made the following short term trade:

1. 23 July 2012                        BUY 1500 @ 6.45p                            total = £102.48
2. 11 September 2012         SELL 1296 @ 8.3p                              total = £102.32

At 8.3p, the gain was £16.77 or a 16.3% return.

1. 23 July 2012                                        BUY 6.45p

A VOh and hourly kumo breakout appeared and since this was the first VOh after a reasonably large volume day below 6p (when price was still below the hourly cloud), I thought that this might have been a false start since historically EME has given a number of false VOh signals before the price markedly increased but I thought as a start, 1500 shares is a foothold and then I waited for the next VOh. And I waited. And I waited some more. Another VOh NEVER came after that. Instead the price just moved up in small steps over a long period of time, but through the price climb a number of other technical signs presented which confirmed the uptrend, namely, the hourly ascending triangle between 23 July 2012 and the end of August 2012, followed by a breakout of this triangle which appeared at the same time as there was a daily kumo breakout to the bullish side, above 8p.

2. 11 September 2012                         SELL 8.3p

The sell at 8.3p fit the short term sell criteria - I was in a ‘reasonable’ profit for the amount of capital used and length of investment time and the bid price (8.25p) exceeded the pivot point R2 level for that day, which was ~8.08p.

The surprising thing about this was the single VOh that appeared despite the many daytraders and panic sellers who sell in their droves at every 0.25p tick up in the bid price (as well as on news). The short term trend made the price rise 57% from 5.875p to 9.25p. I guess this is the importance of monitoring the whole short term trend, and not just a snapshot of a few days. If you don’t do this then there will be others who will do, and they will take advantage of you....fact.

Now some people may wonder why I bother going to all this effort for a measly profit? Well looking at a longer term view of EME and you can see that it has been ranging in price below 10p for over 2 years, during which time you could have taken advantage of the short term price swings to build up a holding using however much you want, and this is what I have been doing between:

1. 18 July 2011 and 5 September 2011:

-          Bought 8110 shares (total ~£463)

-          Sold 7264 shares (total ~£463)

-          846 shares remain

2. 29 November 2011 and 3 February 2012:

-          Bought 3000 shares (total ~£158)

-          Sold 2482 shares (total ~160)

-          518 shares remain

3. 23 July 2012 and 11 September 2012:

-          Bought 1500 shares (total ~£102)

-          Sold 1296 shares (total ~£102)

-          204 shares remain

Total shares that remain:              846 + 518 + 204 = 1568 shares

So in this case, even though the price has ranged, I’ve managed to recycle the same capital to take advantage of the short term price swings, retrieved my capital and in the process acquired 1568 shares to hold in EME for the long term, boom or bust.

VOh: hourly volume oscillator rising above -1 after being below it

VO: volume oscillator

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.