When people talk about “The mother of all gaps”, it appears to be true. The only way to verify that, is to pass through it again, and see how little resistance we will have. The volume and price movement through the upper $5 range was impressive. The general increase in volume adds to other conclusions. I refuse to believe the added volume is just momentum trading. I suspect more institutions are in on the action, given the increase in oil price, and supply/demand data, that is bullish for some time to come.
Revised resistance levels, in Canadian Dollars.
$17.78 double top 2015 *
$11.48 single top 2015 *
$ 8.40 single top 2016 * &
$ 7.56 double top 2015
$ 7.14 double top 2016
$ 6.30 double top 2015 (Highest Volume By Price)
* Volume by price is 10% or less of what it was, for the levels below $7.56.
& Shorts will experience “F.O.I.L.” fear of infinite loss above the $8.40, whether it’s a trade or a hedge they are holding.
On the topic of institutions, there is an amount of time that must pass before average investors know, what institutions are initiating, or adding to their positions. I have mentioned the topic of mergers or acquisitions, and our recent increased volume indicates a greater possibility than we had before.
Whiting and Oasis announced a merger yesterday, and I believe there are more to come. Will Baytex be involved in another one? An institution that likes what they see, as we longs do, might be initiating a bid by taking a position in the stock, before they need to report it. The position could be small, relative to next quarter, as most of the high volume is recent, and this quarter is coming to a close. Check my past posts for more on this topic.
Options expiration is quad witch this time.
https://www.m-x.ca/en/trading/data/quotes?symbol=BTE*
I ignore the weekly options. The July expiring $5 and $5.25 could look interesting to call buyers. I expect a bid of $0.30 to $0.50 under the current bid might fill by next week, and offer tremendous value and leverage, to momentum traders. The same could be said for the options expiring beyond July. In general, open options contracts are on the decline, as call sellers are fearful of being called away, and missing equity in the process. Leewardcape, I hope you get to close any position you may hold, one day before any Baytex moving news is released.
I have even looked at buy/write strategies in the past month, and the same conclusion prevents me from doing this. If Baytex receives an offer to be acquired, I have a hard time believing they will accept at the current stock price. Any acceptance of an acquisition at the current stock price, might jeopardize any future they could have had, with the new combined company!
I believe any acquisition price is higher than $17 CAD, and could be even higher than that. When time is added to the equation, the price must increase. Will I throw out $30 as a number? YES, if the close of any deal is after July earnings release. Q1 is going to be good, and Q2 2022 is going to be epic! Everybody with a pulse knows this, and that is why the message board distortion crowd is telling us their moves, and motivation. THEY MUST HAVE YOUR SHARES, OR THEY CAN NOT FILL INSTITUTIONAL LARGE ORDERS, THAT MAKE THEM MONEY.
Don’t sell shares until Baytex has reached a point where the stock overvalued, and oil supply and demand data suggests oil is going lower over the long term. If recession hits, yes, oil might trade lower than it is currently. Central Banksters will throw more money at the problem if a recession hits, and the can will be kicked down the road, one more time.
High prices will cure high oil prices, and that number is higher than where we are now. It takes a lot of time and money to increase supply. Those who depend on oil can not afford to buy new electric cars, on 8 years loans that look like home mortgages used to. The old cars with combustion engines are going to remain in play for a long time. Diesel fuel can not be beaten economically for trucks and transport, or even trains.
I am not really back to the board, I have just been lucky on time recently. I am going to get busy, and will not be able to post often. If I can’t post or reply, it’s not because I don’t want to.
The next phase in my career is beginning now, and the one after that, will begin next fall. I am preparing for next fall already.
This is RS, signing off. I don’t know when my next post will be. Good luck Baytex longs.