Aussie gas project put on back burner

SANLAM, one of the recent market leaders, has sold off sharply in recent weeks but has now reached a support level, where it is a low-risk buy for traders.

Sanlam Recommendation: Trend:

– Low-risk buy

Buy Short-term down, but oversold. Med-term sideways. Long-term up. (Daily)

Sanlam has dropped to test its early-March low, rallying off there twice (to confirm support at line 1). Given that line 1 is holding, Sanlam is a buy for traders.

Its short-term Stochastic (on top) is giving a positive divergence from its oversold region, which is an early warning of a rally to come. A move above line 3 on the Stochastic will be an early warning of the rally actually starting.

In terms of targets, there will be some initial resistance at R76, but once it breaks through there, look to take half profits at R78.40 and the other half at/near line 2 (R81). Note, there is a resistance zone formed by line/s 2 that won’t break easily.

The stop-loss is a close below R71.50. From R78 raise the stop to a close below R73.30 and take profits as advised above. From R79 raise stop on the remainder to a breaking of its prior one-day low. BHP BILLITON is lowering the priority of its Scarborough liquefied natural gas (LNG) project with Exxon Mobil in Australia amid a fall in prices and increasing competition from the US. “LNG prices are down quite a bit from last year,” Tim Cutt, BHP’s petroleum president, told reporters yesterday in Melbourne. The project “falls a bit lower” on the list of opportunities, he said. A plunge in oil has forced companies to cut or delay spending on projects that supply super-cooled gas linked to the price of crude. In September, Cutt said that he backed plans to develop what could become the world’s largest floating LNG project and that BHP was aligned with partner Exxon. – Bloomberg

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