Small Cap Oil Stock Pick — Trade Potential
Over the past couple of days I have been looking at a particular small cap oil stock’s chart and felt I had a handle on two-way price action for it. As of this weekend, I was thinking that shorting the stock would be a good idea for a nice 25 cent per share gain and then flipping that around for a gain on the upside.
It’s 1:30pm Monday (EST) and the short idea is at work nicely. The stock is down about 39 cents per share from Friday’s close and trending down. I’ll show the chart and other info below, but I really felt that this stock wouldn’t see any support until about $7.75. There’s also some interesting patterns over the last couple of months as you’ll see.
As for playing it from here, if the stock gets its support and starts going back up, it could head back over $8.
I’m a trader, so I just look for little opportunities all the time and I wanted to share this one with you. Feel free to comment.
Stock Pick Details
Stock: Basic Energy Services (NYSE: BAS).
Market Cap: $329.78 million
Summary: They provide well site services to oil and gas drilling companies in the USA.
52-week high: $11.34
52-week low: $5.78
Can short? yes
Institutional Ownership: 87%
Average Volume: 386,000
Employees: 3,800
Basic Energy Services Chart
Trade Thoughts
I drew a couple recent lines for you, so you can see that the support is holding around $7.75-ish, but it is trending down slightly.
If you look at the end of February, beginning of March, you’ll see a slight bounce—about 50 cents per share. Moving ahead a month, we again see a reversal at the end of March, beginning of April by about $3 per share.
Here were are coming up on the end of May, beginning of June, and the stock looks like it might bounce again.
For me, I was looking at the short side once BAS started trending down in May. I like the pattern potential here. On the buy side, I’d be looking for something like a quarter, perhaps $7.80 through $8.05.
Today, the company announced that it will be presenting at the UBS Global Oil and Gas Conference that’s held in a couple more days. By the way, if you’re interested in the presentation from the conference, it will be available at their site from the conference time until about 7 days after.
Stock dropped and closed around $7.75 as expected ($7.73 to be exact).
Forgot to reply saying the the upside trade worked without a problem. BAS easily soared past the $8 mark ($8.30).