"Commerce
without honor is theft."
-- Christina Nikolov
Drilling Into Resistance
by
Christina Nikolov, Founder ChartWatchCentral
Stock/Ticker: Global SantaFe (GSF)
Date: May 5, 2003
Opinion: Bullish
Current Price: $20.80
Target Price: $23.00, then possibly $25.00 and $32.00
Commentary:
Shares of GlobalSantaFe (GSF) are sitting near a four year low, after having lost 55% of their market value since October 2000. Don't let the grim appearance scare you, because we believe now is the time to buy.GSF is currently oversold on a daily and monthly basis. The last three times GSF was this oversold on the monthly chart, the stock was within one month of a significant low. That's good news, considering the shares are currently approaching significant support between $19 and $20. (chart #1) Going back to 1999, there were numerous occasions when GSF found support at $19. And in late-1998, there was at least one instance when the same level briefly acted as resistance. (chart #2)
Richard George's trading record has been excellent since he was elected to GlobalSantaFe's board of directors in July 2001. Instead of purchasing GSF's shares immediately upon his hire, he waited until the price was cheaper November, then watched his position soar 75% over the next six months. In September 2002, George added to his position at $20.44, then saw those shares jump 29% in three months. He hasn't sold any of those shares, and now the stock is trading right where it was when those purchases were made. (chart #1).
The company's President and CEO C.Stedman Garber, is cautiously optimistic that as the military conflict in Iraq comes to a close, global energy prices will stabilize, resulting in increased drilling activity. Garber believes GSF is well positioned worldwide to take advantage of any improvements in these markets.
If you are looking to profit from an upswing, we like the January 2004 17.50 call (Symbol: LEJAW), which is currently fetching $4.80. We also recommend holding the underlying security, since you will be getting paid a 0.72% annual dividend (15 cents/share) while you wait for a rebound.
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Chart(s):
1) Global SantaFe (GSF) Twelve Month Daily Chart
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Click the Chart for an Enlarged View
2) Global SantaFe (GSF) Six Year Monthly Chart
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Click the Chart for an Enlarged View
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