Diversified Energy Company shares ready to bounce?
Down by a third in a month and trading at prices not seen since October, independent analyst Alistair Strang assesses the odds of a recovery at this US focused natural gas company.
13th March 2025 06:58
by Alistair Strang from Trends and Targets
It’s always a bit of a puzzle, when the media suddenly switches to “Analysts rate XYZ as a buy”, generally at a point where a share price can be in a big nosedive. When we reviewed Diversified Energy Co (LSE:DEC) at the start of this year, we laid out criteria which would force us to re-evaluate the shares potentials and now, not only has it made it down to 940p, but worse, emphatically closed below such a point.
- Invest with ii: Open a Stocks & Shares ISA | ISA Investment Ideas | Transfer a Stocks & Shares ISA
With the share price spending the most recent five sessions waving a surrender flag, we’re certainly curious at the number of buy recommendations as the only things visually capable of arresting the current price drop are the two trend lines on the chart below. Maybe the Blue line shall afford a halt to the drop, maybe it shall be the Red line. Or maybe neither will feature in traders thoughts and the share shall continue exploring the depths of misery.
At present, below 824p looks like it shall prove nasty, potentially able to trigger reversal to 746p next with our secondary, if broken, at 519p. We would certainly hope for a bounce before 519p makes an appearance, due to price movements below such a level having terrible implications.
On a brighter note, the visuals suggest it may be more likely to anticipate a bounce anytime soon, perhaps with an inevitable spike down to 824p before it actually happens. This is a fairly typical playbook event, the chart almost writing a clickbait headline telling folk to expect it.
It is certainly the case that movement above 960p would be regarded as the first tentative step toward recovery, suggesting a cycle toward 1,253p with secondary, if beaten, at 1,352p and once again, an urgent need for us to revisit our calculations!
Source: Trends and Targets. Past performance is not a guide to future performance.
Head of ii Editorial Lee Wild owns shares in Diversified Energy Company.
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.