Zak Mir’s Monthly Pick
ZAK MIR’S MONTHLy PICK Buy Gulf Keystone (GKP): Above 75p Targets As High As 120p Recommendation Summary: Gulf Keystone, whether you are a bull or a bear, seems to be akin to the North Face of the Eiger in terms of analysis. While the collapse of the shares back below three year lows of 100p clearly suggests that the doomsters have the bit between their teeth, this monthly pick highlights the way that things may now change. The prime reason is that the book has been closed on the leadership era of former CEO Todd Kozel.
The longer this feature remains unfilled, and the longer the shares remain so far below it, the greater the risk of a fresh leg to the downside. However, the good news is that even if all we are seeing is a holding pattern before Gulf Keystone lets its shareholders down again, the chances of an intermediate rate / countermove look relatively high.
Much will of course depend on how the new management tackle what looks to be a volatile situation on the ground in Kurdistan, the legacy of retail investor disappointment and corporate governance issues. That said, the argument here is that, barring severe and new negatives from the company, at current levels it may finally be worth giving the benefit of the doubt to the buy argument.
Technicals: We have a relatively cut and dried picture as far as the daily chart of Gulf Keystone is concerned. This consists of an extended consolidation by the stock since the big inverted head & shoulders formation cracked to the downside in March. Indeed, the main negative of this move remains in place in the form of an unfilled gap to the downside.
Indeed, with the backing of an extended uptrend line in the RSI window it could very well be the case that the present range floor towards 75p remains intact ahead of a dead cat bounce. This would at least open up the chance of one more surge towards the main post April resistance through 110p.
August 2014
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