Sell InterOil (IOC)

After a long rally, markets are topping out, risk is increasing, stock moving news for the company is likely to be months away and the stock is technically broken, so we can only come to one conclusion. While not a broken company (far from it), it looks like a broken stock, at least for the moment..

The overall markets are increasingly nervous and the risks are increasing:

  • Oil rise as a result of political developments. This is a very unpredictable situation.
  • China is cooling and its real estate investment is unsustainable.
  • These developments come when the markets had a very nice run-up, which now looks tired.

So the overall backdrop is one of increasing risk. Then we think stock-price moving news at InterOil is months away:

  • Energy World Corporation does not seem to be close to financing, at least the stock price isn’t indicating as such (despite a pretty hefty volume day today).
  • More immediate news, like earnings, a GLJ resource update, and Government approval of building plans for the condensate stripping and modular LNG plants will not likely be big movers.
  • Big, stock price moving news like take-off deals, farm-out agreements, FID’s on stripping plant and modular LNG, or resource sell-offs are likely to be months away.

And the stock looks distinctly wobbly from a technical point of view:

  • It’s 20 and 50 day moving average broken on a move yesterday on relatively high volume
  • The wedge which we noticed before, looks to be broken on the downside, not the upside

6 thoughts on “Sell InterOil (IOC)”

  1. Well said……think i may cash out today and hope on later….thanks.. I have enjoyed the past 2 years reading on this tiny companies discovery and believe one day it will shoot up… unfortantely that one day is months and years away and in the mean time i (and shareholders) need your money to work for you and not remain stale and neutral.. I think IOC could possibly see a dip to the low 40s like we did last summer…..Over and out NW

  2. Stock charts don’t lie and represent a good indication of how buyers/sellers view a stock (history). Based on the above TA, it’s clear to me at least that many are willing to sell regardless of the fundamentals.

    IMO something is going on, nothing critical but enough so that some are willing to sell IOC and move on to other opportunities. The problem could be EWC financing. There are hints in it’s stock action.

    Disappointed but willing to continue to see how it all plays out.


  3. I thought EWC financing could never be a problem (mitsui ??)..may be this is a good entry moment for ewc as well…the lack of any news could have driven EWC pps down..

  4. my thoughts…cash out move to other investments, then once FIRM news is release jump on board. IOC which i have watched its performance for two years daily, always provides a time to jump back on board….however given the operational status i dont see much change that will happen til the later part of 2011… the stock just doesnt pop anymore on news release, its gotta be a major annoucment…OIL is @ 102 today, a savvy investor would move his $$ to direct acquistion of oil and invest into oil wells and to take advantage of the current tax breaks that obama wants to get rid of….. oil @ $55 a barrell well thats tough to get a good return on your investment but at 100+ my heavens you can make a killing

  5. Honestly, I think Paul Krugman has too much inflence over your judgement of world economic conditions causing you to lose faith in your own instincts.

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