Woodside's gas balloon is a swell stock after GFC bust
It's not all plain sailing, though, with controversy erupting over the environmental sustainability of tapping coal seam gas deposits; and Woodside, the subject of this week's column, has met resistance from environmental, indigenous and community groups over its plans to build a liquefied natural gas (LNG) plant at James Price Point near Broome.
This week's chart has been produced by Gary Burton, a member of the Australian Technical Analysts Association and a broker with Wilson HTM. It shows the boom has by no means delivered big returns for long-term holders of Australia's largest independent oil and gas group.
Before the financial crisis, Woodside was at a high of $69.93 and, as the chart shows, a downward trend line developed, which is still in place. But it hasn't been a steady ride down.
After the fall from the pre-GFC high, a support level emerged at $40. The price fell through that level in June 2011, reaching a low at point 1 of $29.69 in September 2011. This was about $3 above the post-GFC low reached in November 2008 (not shown on this chart).
The price fluctuated over the next 10 months, making two more sharp drops at points 2 and 3. Burton says that when price movements make three lows in succession it is highly likely that a base price has been established. So far the chart confirms this view, as the price has risen considerably since then.
Indeed, it has established another small support level at $32.88, which has been tested a couple of times; and while this happened, an upper resistance level of $36.07 was established. The price broke through that early this year and for a time even went through the post-GFC downward trend line shortly before it went
ex-dividend.
Now the price has broken back through the $36.07 level and is back in the trading channel formed last July, with $32.88 again the support level. So, what can we expect from here?
As the line from point 3 shows, Woodside appears to be in an uptrend, although this has been tested in recent days. If there are further falls but the $32.88 support level holds, that will be a good sign. A move above $36.07 would represent "a strong buy signal", Burton says.
On the fundamental side, Woodside's profit jumped 24.5 per cent for the year to December 2012 on revenue up 32.2 per cent and its dividend yield is 3.7 per cent.
This column is not financial advice.
rodmyr@gmail.com
Frequently Asked Questions about this Article…
The article says Australia is in a large gas boom with about $180 billion being spent on sector infrastructure. That demand and investment underpin companies like Woodside, which is a major independent oil and gas group involved in LNG projects.
Woodside reached a pre‑GFC high of $69.93 and then developed a long downward trend line. After falling through a $40 support level, the share price hit a low of $29.69 in September 2011, made additional lows, and has since formed a trading channel with support and resistance levels noted in the chart commentary.
The article identifies a support level at $32.88 and an upper resistance level at $36.07. An earlier support level at $40 was breached, and a low of $29.69 in September 2011 is also cited.
Technical analyst Gary Burton notes the price made three lows in succession, which often indicates a base has been established. Since those lows the price has risen considerably, supporting the view that a base may be in place.
According to Burton, if the $32.88 support level holds after any further falls that would be a positive sign. A move above $36.07 would represent 'a strong buy signal' on the chart.
On the fundamental side the article reports Woodside's profit jumped 24.5% for the year to December 2012, revenue rose 32.2%, and the company had a dividend yield of 3.7%.
Yes. The article highlights controversy over environmental sustainability and mentions that environmental, indigenous and community groups have resisted Woodside's plans to build an LNG plant at James Price Point near Broome. It also references debate over tapping coal seam gas deposits.
The chart was produced by Gary Burton, a member of the Australian Technical Analysts Association and a broker with Wilson HTM. The column combines technical observations with fundamental results but explicitly notes it is not financial advice.
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