subject: The Moment to Actually Buy BP [print this page] BP gapped greater at the start up this daybreak and the MACD histogram on my intraday graph in VectorVest 7 Real-time changed positive at about $32.40 per share. Is now the time to purchase?
Certain investors believe so. The stock hit an intraday low of $29.00 per share on June 9th and it has been consolidating ever since. A big-time investor, who invests in distressed companies, appeared on CNBC's Fast Money show last week, saying that BP has incredible financial strength, it will survive and he's buying the stock in large chunks. I believe his comments had a lot to do with stifling BP's downward movement. Moreover, Ms. Maria Bartiromo also said last week that Dubai was rumored to be buying the stock.
On the other hand, plenty of money professionals and other different visitors have shown up on CNBC, stating they are not buyers...it is too harmful, its problems aren't really going away in the near future and it may go bankrupt. So when could be a good time to buy this stock?
The time to invest in this stock is after it has discontinued going down in Cost. When, pray tell, would that be? It has stopped going down when it starts going up, and that's not a joke. For example, the positive MACD histogram indicates that BP's Price has started to go up. But it's a very preliminary signal that only Aggressive Investors or Traders would use. I've been Short BP since mid-May and I covered my position this morning, but I'm not buying just yet.
As for Wise Purchasers, they need to look into investing in this stock only on a considerably stronger, much more dependable sign that it has ended heading downwards and has started off to move up, i.e., when it goes by, "The Acid Test."
To find how well "The Acid Test" works, you can have a look at Yahoo!, for example. Please access an All-Weekly Graph of YHOO. Delete Stop Price and RT, change MA3 to a 30-week period and add MA1 to show a 10-week moving average. Now remove Price so that you can clearly see the 10-week and 30-week MAs. Note that the 10-week MA crossed down through the 30-week MA on 05/12/00 at $62.84 per share and stayed below the 30-week MA until 12/21/01 when YHOO was at $8.46 per share. It had an "H" Rec and the rally failed. VectorVest finally gave YHOO a "B" Rec on 10/11/02 even though the 10-week MA was below the 30-week MA. This up move lasted until 03/04/05, when YHOO was $32.36 per share. A similar analysis on BP indicates that downturn has just begun and it could be a while before "The Acid Test" signals When to Buy BP.
P.S. When people hold it for BP in order to obtain a "B" sign, you should think about getting Clean Harbors, CLH, who must help to make a large amounts of money from the problems.
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The Moment to Actually Buy BP
By: Chris Fox
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