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The Patos Marinza oil field in Albania (Bankers Petroleum)
The Patos Marinza oil field in Albania (Bankers Petroleum)

Schizas' Mailbag

Bankers Petroleum is a stock in distress Add to ...

Hi Lou,

Have you changed your outlook for BNK from your May 20th comments?

Regards, Al

Hi Al,

This will be the third time I have run the charts on Bankers Petroleum Ltd. in 2011. The first time was Related contenton Jan. 14, 2011 for William when the shares were trading at $8.67. At the time it looked like there might be more to come based on the anticipation of increased production from their heavy oil assets in Albania. BNK got a lift to $9.92 before it started to gasp for air.

Related contentOn May 20, 2011 on a request from Humayum I took a second run at the charts and mentioned that a downtrend had been established and that volume had thinned out. It was advised to wait before committing capital given the trend. Retrospectively that was the right call.

Another review of the charts will assist in making a buy, sell, hold decision.

The three-year chart depicts the downtrend that started in March of 2011 and has dragged the stock from a high of $9.92 to its current value of $4.40. A 55 per cent reduction in market value is what will drive investors to extreme alcohol therapy for relief.

After conducting research on the company’s first- and second-quarter reports, it's clear that although the year-on-year and quarter-on-quarter performance was outstanding, they failed to meet Street expectations. Typically, when a company fails to meet the Street the stock gets punished. BNK is expected to report its third-quarter on Nov. 11, 2011. Make sure to post this date on your calendar if you own or are thinking of owning this stock.

The six-month chart provides a visual example of a stock in distress. A series of lower highs and lower lows, a death cross that formed in late June of 2011, and an established downtrend. At this point in time the RSI and MACD are not indicating a shift in momentum to the upside. BNK has caught a couple of bounces off the ledge of support at $4.00, but until there is a trend reversal it would be prudent to stay on the sidelines.

Have your own question for Lou? Send it in to lschizas@globeandmail.com.

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