BUR: Further Short Term Weakness/Longer Term Bullish
Updated
It looks like we are in phase B of an accumulation structure.
Phase A characterized by stronger impulse moves has supply absorbed. This was evident by the large moves we saw early on. As we enter Phase B, the volatility shakes out, where longer term traders start buying. This is evident by weaker impulse moves and shortened thrusts. Typically we should see going into Phase C a spring type action (marked by a sharp sell off) with a higher volume signature indicating further absorption, followed by a reversal reaction that has lower volume (signs shares have been accumulated).
Fundamentally, the shares are still cheap and according to the CEO the market value of the portfolio is somewhere in the 3 bn ex Petersen(while the enterprise value is 2bn). A good catalyst for a short term weakness is the upcoming earnings call. Its possible that the immediate reaction will be negative (based on lower progress in cases) but long term prospects for the company will remain high post digestion of the news. A secondary negative reaction could be the loss of the Petersen case or failure to be able to collect the payout (which I think is more likely).
Phase A characterized by stronger impulse moves has supply absorbed. This was evident by the large moves we saw early on. As we enter Phase B, the volatility shakes out, where longer term traders start buying. This is evident by weaker impulse moves and shortened thrusts. Typically we should see going into Phase C a spring type action (marked by a sharp sell off) with a higher volume signature indicating further absorption, followed by a reversal reaction that has lower volume (signs shares have been accumulated).
Fundamentally, the shares are still cheap and according to the CEO the market value of the portfolio is somewhere in the 3 bn ex Petersen(while the enterprise value is 2bn). A good catalyst for a short term weakness is the upcoming earnings call. Its possible that the immediate reaction will be negative (based on lower progress in cases) but long term prospects for the company will remain high post digestion of the news. A secondary negative reaction could be the loss of the Petersen case or failure to be able to collect the payout (which I think is more likely).
Trade active
Price is seeing some selling pressure now, this could be the back up that we were looking for. The case docs for YPF came out and the arguments look favorable to me. They are looking for 70% of a 20 bn payout (max) but probably a settlement of 2bn on the books. Looking to add some out of the money leaps here.Note
There could be further weakness ahead - not sure whether this is a good place to add yet.Note
Very strong day today - a push above the midline would suggest we will break out of the consolidation and into a new stage of mark ups.Note
Good entry point today on the pull back; this is backing up action before the breakout.Note
Add to the breakout.Note
With this YPF ruling, it makes sense to add to the position. Liquidation value of the company becomes somewhere around 34 dollars (putting a value of 0 on the business).
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