[UPDATES :
Monday 5 July : The Homeland Security office has apparently taken over control of the joint website it was running with BP providingupdate on the oil spill.
In another development shares could be sold to Libya. Shokri Ghanem, chairman of Libya's National Oil company, said thy are a bargain and he will recommend that Libya take advantage of the share price.
'BP is interesting now with the price lower by half and I still have trust in BP - I will recommend it to the LIA (Libyran Investment Authority),' he told the Wall Street Journal.
Personally I still think there is a lot more potential for trouble on the horizon and the share price is still nowhere near the 200 day moving average yet. So I will be sitting on my hands and waiting to see what the relief wells bring in August, if anything.
Friday 25 June - The charts still look awful, there was what is known as a 'death cross ' at the beginning of June at 577p (see below) and it's been downhill all the way since. There is also now a death cross that appears to be forming on the FTSE 100 and possibly the DOW - see
death cross. Tony Hayward appears to have got his life back. There was an accident that took the cap off the well and let out more oil. BP may be having credit problems. The BP share price is down around 10% today to 300p in the UK. So I will stick by my 'finger in the air' prediction of 200p. There was a guyon CNBC around a week ago sayin tha BP had another 30- 50% to fall too and that people should wait till the relief wells are finished before getting long in BP.
Friday 18 June -
BP has set aside $20 billion after the White House twisted their arm, but this is not a ceiling - they have also cancelled their dividend payments for 6 months - Tony Hayward has been grilled by Congess and said nothing - his line of defence seems to be that as CEO he is not in a position to know anything, 2 months after the explosion he says he still does't know who took the decisions - so is this the bottom for BP shares ? They are up 3% this morning at 369p - but personally I am still waiting for the share price to get back above the 200 day moving average. There are people saying that the charts indicate 200p - there are plenty of other people getting out of BP and there will be shorters of course, some of them n*k*d no doubt - so all in all BP is now not for widows and orphans IMHO.
Friday 11 June - BP shares have been bouncing around all over the place (up 7% today) - there are threats from the US government, other oil companies are circling, the UK government is getting involved, - scientists have just said that there are 40,000 barrels a day leaking, which by the way is 8 times more than BP were admitting to back at the beginning of this fiasco (and people in the UK wonder why BP are unpopular in the US !) - I suspect there are powerful forces that want the BP share price even lower - shorters, other oil cos. for example, so keep an eye on the charts - the BP share price is still way below the 200 day moving average - see below]
Back in May I asked if it was
time to buy BP stock and concluded that no it wasn't (based purely on the BP stock chart), in that post I wrote "The price is certainly falling fast but it's still nowhere near the 380p we saw back in 2008" - well we are now rather cloer to 380p - the BP share price as I write is 385p. But we still need to look at the BP chart, as the BP share price continues to fall, down another 5% today. Many people are now starting to wonder if BP will go bankrupt.
The share price has fallen around 40% since the blow out occurred back in April. BP, and Tony Hayward in particular, have proved themselves particularly inept when it comes to stopping the spill and at the same time highly efficient when it comes to making ridiculous statements, that are not only offensive but also betray a singular lack of intelligence. BP's ability to deal with this disastrous oil spill must therefore be in serious doubt. After all, their judgement must be called into question given that it was their actions and decisions that led to this oil spill in the first place.
Andrew Sorkin in the
New York Times has said that bankruptcy cannot be ruled out and that Shell and Exxon Mobil are said to be "licking their chops". They would need to separate out the costs involved with the spill and legal claims of course and place them in a separate corporate entity.
BP’s liability for economic devastation Under the Oil Pollution Act of 1990, over and above the cost of the cleanup — is capped at $75 million. But, says Sorkin, "if BP is found to have violated safety regulations, which seems likely, that cap becomes irrelevant".
David Buik, a Brit, at BGC Partners in London wrote “There are so many imponderables over whether its liabilities would be capped or not. If BP’s share price continues to fall, it could become a takeover target.”
Estimates on how much the spill will cost vary from around $3 billion up to $40 billion.
Today BP shares are down over 3% again in New York and 5% in London.
President Obama said on Tuesday that if Tony Hayward had been in his government he would have fired him over his remarks, notably "I would like to get my life back" which is the most famous of his potted thoughts, but by no means the only one. To put this into context check out the
oil spill live video feed - BP claim to be collecting 15,000 barrels a day now, but there are others that say that they have actually made matters worse by cutting off the riser pipe.
Personally I find the fundamentals and the implications of this whole situation quite overwhelming. So I prefer to just look at the BP stock charts. There is one simple rule that you can apply when considering if it is time to buy BP stock. Namely, where is the 200 day moving average ? If you know nothing about stock charts then allow me to recommend this excellent article on the absolute basics of understanding stock charts -
stock trading for beginners.
The one simple rule states - don't buy a stock that is trading below its 200 day moving average. Here is the current 2 year stock chart for BP with the 200 day moving average in green and the 50 day moving average in red.
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As you can see the 200 day m.a. is still way below the BP share price. NB : Chartists call the point where the 50 day m.a. crossed the 200 day m.a. a death cross and see it as very bearish. The two moving averages crossed at 577p and this figure should be seen as resistance on the way back up.
If the BP share price does start to recover then it will eventually climb back above the 200 day m.a. in which case it will be time to reconsider. Buying BP now would in my humble opinion be a bit of a gamble given all the potentially bad news on the deepwater horizon. It is quite possible that it has further to fall, if you believe it is due a bounce of course then it might be worth a small punt. This would be akin to swing trading - see
swing trading - but here too the charts have something to say. When swing trading don't buy a share if its 5 day moving average is in a downtrend.
BP 2 month stock chart with 5 day moving average
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As you can see, the BP stock price 5 day moving average is still clearly pointing downwards. So is it time to buy BP stocks yet ? My guess is no. But I'm not an expert or an advisor so take everything I've just written with a grain of natural sea salt. But keep an eye on the 200 day moving average too.
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