Can Enquest shares more than double?
7th July 2021 08:10
by Alistair Strang from Trends and Targets
The UK North Sea and Malaysia oil explorer has doubled in value in the past eight months. Chart analyst Alistair Strang discusses how it might do the same trick again.
“Wrong colour toilet paper purchased for the New York Stock Exchange provokes reversals when the markets opened!”
Just once, it’d be nice if the financial press conceded they were clueless as to the reason for a market movement. Trawling through the headlines, the cause may be the Federal Reserve, it may be investors taking profit, perhaps it’s something to do with the US President, or then again, China is enacting a crackdown on US listed firms.
The harsh reality was, the market went down, with none of the usual suspects (Bloomberg, Reuters & co) able to identify the cause. It was a bit of a surprise seeing the word ‘Covid’ absent from the usual hysterical reasons, so perhaps we are indeed approaching the brave new post pandemic world.
Two pretty major details proved absent from the headlines. Firstly, the S&P 500 achieved another new all-time high of 4356.46 points, despite closing Tuesday very slightly down. The Nasdaq did better, achieving both another all-time-high and also closing at a all-time-high end of day price. (14,786 if interested).
- Why reading charts can help you become a better investor
- Check out our award-winning stocks and shares ISA
All this flamboyance actually relates, rather obliquely, to EnQuest (LSE:ENQ). Conventional wisdom expects oil company share price movements to reflect movements in the price of crude oil. Given the company operates six fields in the North Sea, the fact Brent Crude is now trading at levels not seen since 2018 appears to have had little effect on the share price. This brings us to something quite curious, a proper surprise from our software.
In the event Enquest's share price manages above 23.5p, apparently we should anticipate a return to 25p – a detail which is painfully obvious. While this fails to provide a useful trading opportunity, we shall be extremely curious should Enquest manage above 25.2p, as this will provide a “higher high” since the trend break and hopeful fuel sufficient force for the price to continue upward to 34p. This target level is mildly fascinating, returning the share price to a level not seen since the end of 2018 when the price of Brent Crude was exactly at the current level.
Regular readers may remember a further detail regarding Brent Crude. We’d anticipated some hesitation at the $75 level, and the market has obliged for the last few weeks. However, Brent Crude has now made a few lunges slightly above this level, creating a situation where we can expect further increases in the crude oil markets.
Long story short, at present, the balance of small signs point toward optimism for Enquest. We can even calculate an eventual 53p as providing some future hesitation, should the market feel a recovery cycle justified. Given the share is presently trading around 21p, such a price increase would represent a laudable ambition.
Source: Trends and Targets. Past performance is not a guide to future performance
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.