Get ready to buy the dip in Santos

Michael Gable

Fairmont Equities

Sentiment towards Santos has improved a great deal recently. The company has reduced costs and the price of oil seems to have stabilised for now. The interim update in August even managed to beat expectations.

We looked at Santos a couple of times in the last few months, noting the bullish nature of the chart. The rally in the last few weeks further confirms our view. It now becomes clear that the stock has much more upside from here and that short-term weakness is going to be a buying opportunity. Let’s take another look at the Santos chart and determine where it can trade to.

From the low in January 2016, Santos made a quick rally, reaching over $5 in August of that year. It then eased back for nearly 12 months, creating a large 3-wave decline to form a "higher low". Santos finally broke the downtrend in late August on high volume. This means that Santos should continue rally higher over the next several months. In terms of a target, it is likely to make a move equal in size to the rally from early 2016. That is, we could see it head towards $5.50. Traders should look to exit if the stock moves back under the downtrend line. In terms of an entry point from here, I would be looking for a retracement back towards $3.70.

 

Any advice is general only. Fairmont Equities uniquely combines both fundamental and technical analysis. Visit our website and get our free newsletter. Join the thousands of investors that receive our analysis and educational articles every week.

 


1 topic

1 stock mentioned

Michael Gable
Michael Gable
Managing Director
Fairmont Equities

Michael Gable is managing director of Fairmont Equities. We are a small boutique advisory that uniquely combines both fundamental and technical analysis. As a result, our analysis is featured regularly in the finance media such as the Australian...

Expertise

No areas of expertise

I would like to

Only to be used for sending genuine email enquiries to the Contributor. Livewire Markets Pty Ltd reserves its right to take any legal or other appropriate action in relation to misuse of this service.

Personal Information Collection Statement
Your personal information will be passed to the Contributor and/or its authorised service provider to assist the Contributor to contact you about your investment enquiry. They are required not to use your information for any other purpose. Our privacy policy explains how we store personal information and how you may access, correct or complain about the handling of personal information.

Comments

Sign In or Join Free to comment