Interactive Investor

After tripling in value, can Bowleven shares go even higher?

8th June 2022 07:42

Alistair Strang from Trends and Targets

After surging from 2.2p to 6.5p in a day, independent analyst Alistair Strang studies the potential for a return to former glories at the oil and gas company.

Sometimes, when an AIM share makes a spectacular jump, it will quickly mimic our unwanted cat. The animal's food bowl is in the kitchen, safely above opportunistic dog levels. To get to her food, she steps onto a footstool, then jumps to “her” feeding area. Sometimes when not paying attention, she fails to make the last few inches, her claws scraping the cupboard door as she slides to ground level with furious indignity.

Thankfully, the Bowleven (LSE:BLVN) share price doesn’t appear determined to mimic the cat. We’ve been flooded with emails, due to the share's flamboyant Tuesday. Presumably they’ve released some good news to the marketplace, something which justifies real movement. We hope!

To get the bad news out of the way immediately, the price needs to relax below 3.2p before we’d experience concerns for the future. And by relax, we mean ‘close a session’ below 3.2p, the level at which the share broke through the Blue downtrend since 2019.

However, the share price has now closed a session above the Blue downtrend and, perhaps more importantly, has also closed higher than its previous high in March.

Despite “only” closing the session at 4.75p, it has officially entered the realms of “higher highs” and therefore optimism is justified.

From a near term perspective, should it trade above just 5.3p, we’ve a pretty weak argument favouring ongoing price recovery to 7.1p next. In the normal scheme of events, we’d propose a “safe” trigger level above Tuesdays 6.25p, but when we review what actually happened after this initial high was achieved, it seems 5.3p can be nominated as the next growth trigger.
Above 7.1p and things start to become a little strange, due to a collection of quite strong recovery potentials.

Source: Trends and Targets. Past performance is not a guide to future performance

Our secondary target calculates at 11.1p, an ambition which makes quite a lot of visual sense as there’s even the impression of a glass ceiling waiting in the future distance.

We can even provide a third level ambition, should the share price manage to actually close a session above 7.1p in the future. In this scenario, we can politely mention 15p. To be fair, we rarely produce a report where we give the potential of a share price trebling but, in this instance, it’s difficult not to mention the potentials.

Hopefully the company avoids shooting themselves in the foot.

Alistair Strang has led high-profile and "top secret" software projects since the late 1970s and won the original John Logie Baird Award for inventors and innovators. After the financial crash, he wanted to know "how it worked" with a view to mimicking existing trading formulas and predicting what was coming next. His results speak for themselves as he continually refines the methodology.

Alistair Strang is a freelance contributor and not a direct employee of Interactive Investor. All correspondence is with Alistair Strang, who for these purposes is deemed a third-party supplier. Buying, selling and investing in shares is not without risk. Market and company movement will affect your performance and you may get back less than you invest. Neither Alistair Strang or Interactive Investor will be responsible for any losses that may be incurred as a result of following a trading idea. 

These articles are provided for information purposes only.  Occasionally, an opinion about whether to buy or sell a specific investment may be provided by third parties.  The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.

Full performance can be found on the company or index summary page on the interactive investor website. Simply click on the company's or index name highlighted in the article.