GTE – When A Little = A Lot

Image by Simon J from Pixabay

The market is on unsure legs. One minute prices are flying high because 7 percent inflation is now considered “Good”. The next minute, markets tumble with the Federal Reserve raising rates as inflation resides in a different universe compared to the Central Bank’s 2 percent target.

Admittedly, it’s a hard environment to find success. With that in mind, we thought it might be a good idea to look for stocks that are technically “oversold” and volatile. Hopefully we can catch a loaded spring that’s compressed and ready to uncoil. If not, most of the downside, hopefully, has been squeezed out of the price.

Gran Tierra Energy Inc. (GTE) fits that bill. Gran Tierra engages in the exploration and production of oil and gas properties in Colombia and Ecuador. As of December 31, 2021, it had total proved, undeveloped reserves of 24.8 million barrels of oil equivalent in Colombia.

The oil and gas company appears to be compressed with a relative strength index (RSI) reading of 28.71. As a rule of thumb, an RSI score of 30 or below is seen as oversold. Many times, a reading that low attracts buyers. GTE can be a bit wild with a beta score of 1.67. By comparison, the S&P 500’s beta is 1, meaning GTE is considerably more volatile than the S&P 500.

GTE’s chart is showing some signs that it could be ready to rebound. Bears tried to push the stock to a new cycle low, only to bounce back. Closing below the bottom of Wednesday’s move ($0.90) becomes an exit point in case its price goes lower.

If the spring unloads some of the recent selling pressure, a close to the north of $0.97 could put the stock on the path to $1.10. It doesn’t sound like much, but it’s an 18.3 percent move from the current price of $0.93.

Overall: Based on our technical analysis opinion, Gran Tierra Energy Inc. (GTE) appears to offer an attractive upside versus downside relationship. Trading GTE is only appropriate for short-term investors with the most aggressive risk appetite.


Rich Meyers
Investing Trends