East West Petroleum Corp (CVE:EW) corrected after a big run last week after the spike up failed to pass above the 200 day MA. The move still left the stock at a much higher pricing, allowing either for further fall or calling for consolidation.
EW had gapped up and rose 30% on Friday and lost merely 7.5% this Monday. The trading volume was down in comparison, suggesting traders would rather see the stock price flying than diving. It still reached nearly 1.4 million shares traded and was significantly above the 90-day average turnover of 599 thousand.
The company had no hot news – the price increased spontaneously, likely in reaction to industry wide developments or rumours. Oil companies operating in Africa recently have been enjoying a similar level of enthusiasm.
The company now holds a market cap of $28.2 million, which is below their book value of $30.2 million, thus the increase in stock price doesn’t seem out of place and could very well stick or increase further, depending on how the trading day turns out.
The rally challenged resistance at 47.9 cents per share, at the 200-day moving average. It was the first time in nearly a year when the price challenged its 200-day MA. Even though it failed, the recent rally still gives hope to bulls that the turnaround in price direction might be at hand.
