I last covered Gulf Keystone (LON:GKP) back in February and warned of danger if the share price closed below 28p.
Since providing such a gloomy forecast, investors continue to be punished for their support and the price has been driven down quite ruthlessly. The other day, I found myself warning clients that absolute, final, cannot break below, bottom is at 5.7p.
This was slightly insane but it relates to movements since February 25. The share price was gapped up quite impressively, giving the impression of good times ahead. But the harsh reality was to prove quite different. All the gap said was: “That's us finished with the old trend, welcome to the new trend.”
Since then it has taken a remorseless battering by the market.
At the start of October, there was one of those movements I detest - an opening second spike. More often than not, these things are harbingers of doom and in the case of GKP it suggested the share was going to reverse to 25p next.
Were it not for GKP's reputation of doing precisely the opposite of common sense, my initial impulse to place a buy order at 25p to catch any bounce was ignored. Instead, when it hit the target, I did nothing other than watch with mounting horror.
On November 23, it broke below 25p (most shares murdered by a spike actually do bounce at target, creating a quick scalping opportunity).
And is now, despite pretending to have a good day at time of writing, is viewed as heading to 17p next.
In a perfect world, it will bounce before 17p as this would imply some residual strength. But I'm not going to pay any attention unless a bounce can take the share price above 30.677p (the blue line), this being the downtrend at time of writing. Unfortunately too many arguments favour 17p as having some sort of bounce potential.
Unfortunately, for those who wish to play safe, GKP has also presented an issue at 36p. For some reason, since the new trend commenced back in February, this level has managed to invent itself as a glass ceiling. Even if the share price touches such a point, the visuals demand it actually close above the pink line before some trust can be applied.
For the present, I suspect 17p is going to prove too much of an attraction. My secondary at 5.7p simply looks stupid. But I'm not going to ignore it, if only because I made a pretty solid case for a bottom at US$28 against Brent crude and if this is correct, the oilers risk another hammering.
Alistair is the founder of www.trendsandtargets.com