Keep an eye on Diversified Energy shares
After rallying through July, shares in this US focused gas and oil producer have dropped back into their old range. Here's what independent analyst Alistair Strang's software says might happen next.
15th August 2024 08:14
by Alistair Strang from Trends and Targets
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When we previously glanced at Diversified Energy Co (LSE:DEC) earlier this year, we were expecting the worst but, surprisingly, it triggered and exceeded our initial gain target.
Perhaps this was a reflection of the price of Natural Gas doubling during summer, the product unusually looking capable of reversals now we’re stumbling toward winter.
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Surprisingly, while Natural Gas prices were recently “gapped up” over their downtrend since the mid-summer peak of $3.3 per million British Thermal Units, DEC recently saw their share price “gapped down” below their uptrend since March (circled on chart below). This conflict of signals happened earlier in August, leaving us more than a little uncertain on what to believe. Is Gas wanting to head up or is DEC wanting to head down?
The nature of Diversified Energy’s trend break makes us suspicious, essentially anticipating some reversals but thinking they shall be short-lived, if Natural Gas is anything to go by.
This being the case, below just 1,053p looks capable of an initial 1,011p with our secondary, if broken, a less likely 911p. A visit to 1,011p would certainly represent a valid point for a bounce, one which could be attained without the share price retreating below the Blue downtrend. It also makes the point where any bounce exceeding 1,100p enters the realms of “hold on and see where it goes”.
Strictly speaking, our jobsworth software demands DEC exceed 1,167p to be taken seriously as this now calculates with the potential of a lift to 1,442p with our secondary, if beaten, working out at a longer term 1,648p and an urgent need to revisit our tea leaves.
Something is certainly happening with the FTSE 250 member and it may prove worth keeping an eye on.
Source: Trends and Targets. Past performance is not a guide to future performance.
ii's head of 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.
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