And now for something different;
Gann mentioned that he treated resource stocks, particularly the non
producer resource stocks (i.e. not yet earnings positive) differently to
industrial stocks. In fact he did mention his trading method is not
easily applicable to such speculative issues. Here is one reason why.
Attached is some info about BPT, BEACH PETROLEUM NL.doc, BPT's recent
announcement to the market.
BPT, with some recent cash flow from its Victorian gas wells, is set to
undertake an extensive program of drilling exploration of its large
lease holdings in South Australia. These holdings are large for the area
There are punters in the market that make their living buying into the
drilling schedule, then out again should nothing be discovered. This is
a specialty area of the market and it helps of course to be close to the
company, and or the action. Your broker can sometimes provide extra
info or a research report on such companies. Some broking houses
specialise in companies like this, notably in W.A.
So, as the drilling of a well progresses, the price may start moving up,
sometimes into new highs even. But then, alas, the well proves dry, as
most do, and the stock price drops. Don't go anticipating a repeat run,
the earnings are not there to drive it.
Of course should the well prove up a resource, then the sky may be the
limit; hence those market players in the first place punting such
drilling schedules. This is one reason why Gann mentioned that his
principles should be applied more carefully in relation to exploration
Click here to see the file (beachpetroleumnl.doc)