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InterOil technical break-out

April 7th, 2010 · 2 Comments

Up on high volume, and with a very nice chart as well…
It was a nice upday on very heavy volume (always a good sign). The trigger seemed to be a trading idea from Morgan Stanley, which we believe contained the following:

IOC: MS Tactical Idea

April 6, 2010

InterOil Corporation (IOC.N)

Research Tactical Idea

We believe the share price will rise in absolute terms over the next 60 days.

This is because the stock has traded off recently, making short term valuation much more compelling. We expect the announcement of an agreement on the development of a condensate stripping facility in the coming weeks.

This will be the first successful step for Interoil in the monetization of its gas and liquids resource, will challenge general market skepticism over the company’s ability to deliver, and we believe will serve as a significant catalyst for the stock. We see value of $11/share for each condensate train, with the eventual possibility of three trains, and believe that the deal may ease concerns somewhat over the successful completion of a larger LNG agreement later this year. Shares currently trade at a 55% discount to our unrisked NAV.

We estimate that there is about an 80%+ or “almost certain” probability for the scenario.

Estimated probabilities are illustrative and assigned subjectively based on our assessment of the likelihood of the scenario.

———[End of article]———-

So MS think deals are coming. We think deals are coming. Now the market thinks deals are coming, see the chart below (one has to scroll down a bit for the technical picture because of width limitations on the site).

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A couple of things are clear:

  • IOC broke the $70 resistance
  • It also broke the downward trend channel.

Tags: IOC

2 responses so far ↓

  • 1 ron // Apr 7, 2010 at 4:49 am

    Thanks, much appreciated!

  • 2 Javier // Apr 7, 2010 at 10:45 pm

    Go IOC! We’ll get to 100 soon!