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Monday, 29 October 2007 |
Truth Be Told
Is there hidden oil deep below the fields of Israel? Many biblical versus suggest such. With this in mind, the founder of Zion Oil & Gas, John Brown, has been on a 25 year mission to discover the black gold.
Our Quantitative Analysis
Since joining the American Stock Exchange early this year, ZN has been on quite the ride. Seemingly, there is a clear trend, which allows us to continue with our technical study due to little volatility. Below we see the Chaikin Money Flow Indicator. The longer the CMF remains in the green, the more bullish/accumulation a security undergoes. Notice the upward trend by connecting the green peaks as well. This is significant because it can be bullish.
Now taking the moving averages and price into study, we see that the 15-day moving average is above the 50-day moving average. This is bearish because inevitably the 50-day moving average will have to crossover the 15-day moving average - this means downward slump in prices. As for the Percentage Price Oscillator (PPO) is beginning a down trend. This is bearish as well.
Talking about crossovers in the above, we decided to overlay the Last Stochastic Technique by setting the %K to 39 days. We are looking for the black line to crossover the red line since this will indicate a reversal to a bullish move. As of now it appears that the black line is heading further south, while the 15-day moving average created a large gap with the 50-day moving average. Moreover, the MFI has slumped. On a positive note, the volume has increased throughout October.
Lastly, the % Volume Oscillator has decreased and the price trend has crossed over the moving average within the Bollinger Bands after traveling along the upper band (this is bearish).
Conclusion
Most indicators are leading to a bearish move. To confirm this, we will wait to see if the price breaks below the support level around 6.20. Once this happen, most likely the PVO in the above will break its support as well. The price break is our sell signal. Perhaps a Put option will be useful if you want to stay ahead of the crowd. If there is no break below support, expect a bounce upward.
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