$Geo Energy Res(RE4.SI)

Paging TA and demand zone experts... pls help me to understand this:
https://www.stocksbnb.com/tech-pulse/techn...

so, 1) says "false bullish breakout"
Question:
1. Why does "2) 0.215 range low held up once again keeping the long term uptrend intact"? Why does that keep it intact? There are trillions of charts that show this, and after a while, it drops below this support.
So how would u determine that it would "keep the long term uptrend intact"?
When it drops below 0.215, then you'd say that is has "broken the support" and then the uptrend is no longer intact? But if so, isn't it reactive? What useful application would that have since you're always behind the information curve?
In fact, even in this same chart, there's also a horizontal support line at ard $0.25..... but it went down also right?

2) More importantly......
why does "3) Bullish break above the 0.23 range high and 20,60MA with increasing volume suggests further upside next"?
Cos earlier, "1)" already says there are 2x "false bullish breakout"
Why is it this time it's not another "false" breakout? Why does it suggest "further upside next"?
I mean, logically, one can also say it suggest a "third time false bullish breakout" cos there were other instances?

I'm just trying to understand the logic behind this arcane science.
Is it logic, or is it emotional interpretation?
Is it predictive, or is it reactive?

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60 comments
div1g4in

So after one week. What do you think? false breakout or further upside?

ThumbTackInvestor

Reply to @div1g4in : Someone who attended the recent investor briefing was kind enough to send me his notes
From the notes, I think the Q2 results aren’t gg to be particularly fantastic
Cos the production costs of TBR will be in, while the revenue won’t be.
Yet, the off take agreement is coming this month.
Also, I’ve a much longer horizon than a mere quarter, obviously
The only benefit of this info is that it gives me some indication of when to add, if I decide to
As for Breakout....... that u gotta ask the demand some experts.
Lol
After asking so long, I still don’t understand the logic

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Sinkie

20 is a reversal indicator, every time Geo energy tried to breakout, 20 will come out with a bullish call later. Instead of pushing it higher, the bull fizzle out lol

thosai

If the price is attractive from FA view, then can buy since the price is stable.
BTW if TTI is trying to buy, better finish first before announcing here to save $$$

ThumbTackInvestor

Reply to @thosai : lol I'm not buying.
Just putting this out for discussion.

FeelsBadMan

Time frame is important. My huat may just be your loose change.
To keep the long term uptrend intact, all candlesticks should be staying above and away from most Moving Averages.
Multiple resistance line have to be broken along with those Moving Averages before identifying an uptrend.

We are always behind the information unless you have someone on the inside providing you realtime numbers. Annual reports or Quarter results also indicate the company past performance.

False bullish breakout is
You close your eyes, clasp your hands tightly together, and see it's broke resistance but went back comfortably the next few days. Imagine today you launch your proton cannons. We see volume and long green bar breaking another potential resistance. However the market doesn't react well and the price could not be sustained. It would subsequently fall back in place where the market determines.

Long Term (2013 - Present): It has been on a downtrend
Mid Term (May 2017 - Present): It has been on a downtrend
Short Term (March 2018 - Present): It still consolidating

1st Support: 0.22
2nd Support: 0.19
1st Resistance: 0.245
2nd Resistance: 0.26

The downtrend was backed by Long Term & Mid Term charts that also closed below most Moving Averages suggest further pangsai than upside next.

But he is not wrong about the false bullish breakout from his indicated time frame (Daily). The shorter the time frame the harder it is to spot the trend due to the noises.

FeelsBadMan

Reply to @ThumbTackInvestor : Consolidating phase and directionless. Exactly I wouldn't know. Pasieh I just ctrl c some of his wordings.

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marginofsafety

"I'm just trying to understand the logic behind this arcane science."

Logic? What's that?

clim

Reply to @marginofsafety : arcane science is art. abstract art :p

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div1g4in

Reading a chart with indicators is as good as listening a bed-time story read by your parents. It's up to you whether you wanna believe it or not. Irregardless of single to multiple indicators or single to multiple timeframes; they're just the same old thing: tell u a story and u decide if you trust them or not.

div1g4in

Reply to @ThumbTackInvestor : so do FA. both use past data to make prediction. it's a probability game.

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ThumbTackInvestor

damnit this analyst must be very stressed.
Zero TA practitioners agree with him
HAHA

zeeq

Making trading decisions purely on a single timeframe is insufficient. I always give single timeframe "analysis" a pass. I can do one top down from 12 months tf all the way to weekly if u want. At glance, it looks like the current demand zone is pretty much used up therefore i would expect price to head lower towards weekly demand zone at 0.195 once 0.215 is penetrated.

ThumbTackInvestor

Reply to @zeeq : biangz.
So what exactly would u think is going to happen here?
1) Up
2) Down
3) Sideways
4) Don't know and stay out

I'm guessing you mean 4)?
I ask for specifics cos tbh huh, at the end of the day, we have to connect all this to real life application, to an action or the absence of an action.

Don't be like the analysts I always watch on CNBC....
"Our base case is that it goes up from here, although there is a slight tail risk that it can trend sideways. If the support doesn't hold up, I wouldn't be surprised if it drops from here either........" (for example)
So what does that mean in real life?
Many words but no relevance to what you can execute.
Anything also can.

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sinhai

Above blue box point of control, prices just bouncing up and down in a controlled zone.
Blue box below is the real hard support around 0.17-0.20.
I disagree with the false bullish breakout because it's still trading within the control zone.

384820a7e5679df890c8e2102351f8a26e5a2bc1
sinhai

Reply to @ThumbTackInvestor : In short, slight bearish bias.
0.215 is a soft support, chart is ranging and no volume to support a break out.

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junnies

TA, like FA, is a probability game, except that it tries to interpret what price is trying to do. If you believe that there is a logic behind the crowd psychology responsible for price action, then it seems reasonable that some of this 'logic' can sometimes be illustrated by patterns on a chart, and if a person is skilled and experienced enough to know when such 'logic' applies and is most likely to be relevant, then he will be able to successfully use TA to 'win' .

For instance, lets say price has been hovering in a narrow price range for a certain period of time, and suddenly breaks up on high volume. This is what is conventionally called a 'breakout', and very often, this 'breakout' is the start of a trending move. The interpretation is simple; buyers suddenly came in huge force and were willing to bid up the prices, therefore there most likely should be a good reason why this has happened, and is thus likely to continue.

Of course, there are many occasions whereby the breakout is "false" and price immediately moves back down, whereby the trade idea of a 'breakout' is invalidated, and the stop loss is triggered. Sometimes, after the stop-loss is triggered, price moves back up and continues to breakout. The idea is that over a sufficient number of tries, the TA person will eventually gain more from the 'real' breakouts that actually happen compared to the losses he takes from the 'false' ones. There are often other intricacies involved in judging whether a breakout is 'real' or 'false', or when other technical indicators apply and when they do not. In fact, just by spending many hours looking at charts, I believe the brain can eventually subconsciously absorb sufficient patterns to be able to probabilistically 'feel' or 'anticipate' what price will do when a similar pattern comes up, even if they cannot articulate their logic in verbal terms.

Certain stocks are less suited to TA by their nature. You would imagine that stocks with low liquidity, wide bid-spreads, and low volume participation would make any interpretation of 'crowd psychology' much trickier than a stock with opposite characteristics. This can be mitigated by using longer time-frames (so liquidity, bid-spread, volume can reflect crowd psychology more accurately on a relative basis).

junnies

Reply to @ThumbTackInvestor : i'm not speaking from personal experience but i imagine that good TA users don't indiscriminately decide when something is breaking out or not based on one or two indicators; they have other technical data and 'experience' that they use to determine which ones are more likely to be 'true'. Just like you cannot use a few pieces of data like 'earnings' or 'revenue' to determine the fundamentals of a stock, a good technician will know from experience what works (for them). Also, breakouts often have significant follow-through, so if the breakout is 'true', they substantially gain a lot more than the loss they would get from a 'stop-loss' (usually the upside is indefinite whilst the loss is limited)

as long as (Wins) times (Amount they win) > (Loss) times (amount they lose), then they come out ahead.

I find TA useful sometimes. For instance, when a stock on my watchlist that I know to be fundamentally sound releases 'good news' and the stock 'breaks out', there is a very high probability that the 'break-out' is caused by the 'good news', which will be the catalyst for the market to re-rate the stock. The probability that the 'break-out' is real is much higher, so you can use this knowledge to add on to the position to ride on the momentum. This is one example of how a good TA user will mix other knowledge to interpret price action. Personally i am not comfortable using TA alone, so i cannot speak for how the pure TA users do it.

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$Geo Energy Res(RE4.SI) $Golden Energy(AUE.SI)

Current export coal prices likely to stay depressed until the end of 2018, until China’s NDRC comes out with a new import policy
Traders and middlemen are panicking and letting go of stock.
Many are very much willing to negotiate... and the ground level actual FOB prices offered, are still lower than the transacted prices that I found.

When it turns though, it’d also mean that I know it just a tad earlier than the typical retail investor... esp since most of the related parties r not even in SG.
I’m happy to hear traders unloading inventory actually, when coastal plants demand come back on, it’d hopefully be in an under supplied market.

TTI’s way of scuttlebutt-ing means unfortunately, I end up wasting the time of a few real businesses who think they have an end client...
Yea, I know, a bit of an arsehole but ah well, I do what I have to do to get the information I need to have...

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$Geo Energy Res(RE4.SI)

From the posts and comments, it’s obvious that many SHs have been scared shitless. Lol.
But of course.
I’ve gotten quite a few questions, so this post will answer it all. Hopefully.
1stly, why the big drop today?
The clear answer is the big drop in GAR 4200 coal prices.
It’s not just Geo, most of the Indo coal players have dropped of late.
Geo’s drop is compounded by their comparative yoy drop in earnings.
Revenue has actually increased, production cost has increased, but only slightly. The bulk of the decrease in earnings comes from the massive debt financing costs.
So the 2 causes are:
1) Drop in coal prices
2) Lower earnings compared to the corresponding period yoy

Let me explain why I’m not overly concerned. And this is where some DD comes into play.
Let me start with 2) first.
The financing costs in the form of the bonds are indeed high and eating away at the profits. And I do fault Tung for not deploying the funds faster, but at the same time, now is exactly the wrong time to be bailing out Cos of financing fees. Cos now that TBR offtake is finalized, the overburden removal is completed, increasing of barge and export facilities are upgraded... and TBR has exported its first 0.2mil tonnage, what remains is to ramp up production in subsequent quarters. Which doesn’t require much effort.
Managements next step is to look at deploying the funds, both from the bonds and from Macquarie, into acquisitions.
So forget about 2018, I think the lowered earnings would reverse in 2019.

Now, back to 1)
This is the major worry. China has scaled back their imports, resulting in a crash in coal prices.
Traders have stopped restocking, leaving miners and middlemen with too much coal stocks on their hands, and they’re trying to dump them on the market, hence undercutting each other.
Also, as prices come down, the higher calorific values are now value for money as thermal coal, displacing the 4200 low sulphuric coal for “coal mixing” to keep within the max sulphuric levels requirement.
Just to give a sense, Gar 4200 prices were as high as $70/t, dropped to an average of $41.50 in Q3, and Went as low as $29, $30 /tonne last week (just once!)
It has rebounded slightly and right now, is at $32/t.
I don’t agaration and put up these figures.
I do my homework while everyone else guesstimates the cause of the drop. (See attached)

Now, what gives me the guts to average up and continue adding if necessary?
Cos I think the $30/t is the floor for Gar 4200.
Why so?
Simply cos the production costs for most producers in Q3 is around that level!
Selling coal below that, is to sell it at a loss.
Geo’s production cost is $30.72/tonne in Q3, and that’s including the costs of starting a new mine (TBR).
It always costs more at the start Cos of the higher overburden removal, higher strip ratio, and all the misc costs of laying new access roads etc.
(See attached, I’ve even highlighted the paragraph for Geo for u)
GEAR’s production costs in Q3 is slightly higher than Geo’s, although admittedly, it’s lower than Geo’s in 1H.
Now:
Average Selling Price (ASP) - Production costs = Cash Profit

In Q3, Geo’s ASP is $43.48/t, production cost is $30.72/t, giving a profit of $12.76/t.

GEAR’s ASP is $40.80/t in Q3.
Adaro energy doesn’t release its exact ASP, but it’s a 9% increase in Q3 compared to Q2, which is lower than Geo’s increase.

In other words, at below $30/t, almost all the producers are going to sell coal at a loss.
Would they start dumping at a loss? I doubt it.
That’s why there’s a shipment last week at below cost, but it quickly rebounded back to $32 today.
China has suddenly increased import restrictions ahead of the seasonally high demand Q4 period and that has taken many miners by surprise. I don’t think this would last. Currently, coastal supplies can last 33days, so it’s on the high side. Once the stockpiles go down, China’s own production is insufficient and they’d have to start importing, and if there’s a brutal enough winter, they’d have to start importing with a vengeance.

Let’s look at Geos numbers now. In Q3, cash profit is $12.76/t.
I’m going to be more aggressive than all the analysts and assume coal prices remain low for a prolonged period of time into 2019.
Let’s assume a $35/t basis, giving Geo a cash profit of $5/t
(Rem production costs come down in 2019 due to synergies between SDJ and TBR)
Assuming a total production of 10mil tonnes
(Revises tonnage guidance given by management is 10-15mil for 2019)
That gives Geo a profit of $50mil.
With the increased number of shares from Macquarie stake, it’s still EPS of 3.6 US cents.
Taking away 20% as an additional MOS, with a forex conversion of 1.35, I’m left with 3.86 SG cents.
At the current price, that gives me a forward PE of 4.8x.
Also, the div of 2 cents gives a yield of about 10.6%.
And even if we cut away the interim div, it’s still 5.3%, which is pretty respectable.

Going forward, the key is the ICI4 prices in the coming months.
So let’s see how it goes.
Of course, coal prices can tank and undergo a multi year bear market like in 2011,2012, and my bet will fall flat on its face.
(But I don’t think so)

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Expiry:
Target Price
$0.285
(+23.91%)
NOW:

$Geo Energy Res(RE4.SI)

FY2018 production guidance of 11-12mil tonnes would mean a 50% increase from 2017's figures.
Q4 2017's ave selling price of $43.41 per tonne is the highest amongst all 4 quarters in 2017, and well, actually, the highest thus far since Q1 2016.
Taking FY17's EPS of 2.88 US cents, that'd be a projected EPS of 4.32 US cents for 2018, or approximately 5.6 SG cents.
Let's include a 30% discount for MOS and to account for the unearned earnings, that's leave us with 3.93 SG cents for FY18, making the forward PE based on the current $0.23, a very low 5.85x.

Immediate catalysts: upcoming offtake agreement for TBR site.
BUMA has already proceeded to start mining the site, actual production will commence in 2 weeks +, at the start of Q2.
Thus, it is not unreasonable to expect offtake agreement to be finalized within the next month.

Immediate risks: Jan 2018 production figures are still not good.
TTI's expectations for Q1 2018: Tonnage mined to be similar to Q1 2017's, but ASP to be 10% or so higher than that of Q1 2017.
(Q1 2017's ASP is $39.45)

Estimate is for 6 months, as the Q2 production figures (Which would include TBR's), would be disclosed in Q2 2018's results which should be sometime in Aug 2018.

Disclosure: at the time of writing this, I own 600,000 shares at an average price of $0.168

UPDATES:
Always interesting to go back to see how my thoughts months ago have panned out.
Above, I wrote:
"TTI's expectations for Q1 2018: Tonnage mined to be similar to Q1 2017's, but ASP to be 10% or so higher than that of Q1 2017."

Results: Q1 2017 tonnage: 2,212,893 tonnes. Q1 2018 tonnage: 1,936,817
A miss of 276,076 tonnes
Quite close, but still a miss.

Q1 2017 ASP: $39.45 Q1 2018 ASP: $46.49
A rise of 17.8%, substantially higher than the 10% or so that I wrote above.

As of Q1 results, taking into account financing costs, I'm expecting full year EPS of 3.75 US cents (taking into account MOS already). Assuming a PE of 6x (substantially below its peers to account for poorer operating metrics), share price would be $0.30.

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