Williams Companies : Short position after strong acceleration
Entry price | Target | Stop-loss | Potential |
---|
$31.34 |
$0 |
$32.5 |
+100% |
---|
The Williams Companies is an integrated natural gas company that produces gathers, processes and transports natural gas. The company’s operations are concentrated in the Pacific Northwest, Rocky Mountains, Gulf Coast, the Eastern Seaboard and the province of Alberta in Canada.
The group seems strongly valued, in fact is trading 21x Thomson Reuters’ 2012 earnings per share estimate. This valuation makes the share more expensive than average sector. The analysts forecast earnings per share for the first quarter is $0.37 after a negative EPS in the last quarter of 2011.
On 3rd January, Williams Company announced that it has completed the process of separating the Company’s business into two publicly traded corporations. The company introduced is in exploration and production business, WPX Energy.
Graphically, we have a big bearish gap formed consequence of this news. This gap is nearly to be filled. Since 3rd january, the share rose about 20% with a constant bullish trend. In weekly data the share is near to test the USD 33.02 long-term resistance. This level could break the upward trend. Both fundamental and technical reasons drive us to suggest a short position on the stock, fixing a fist target price around USD 30, area where we find 50 and 100 moving averages. In add we suggest a stop loss above USD 32.5.
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