Short Petrobras based on an unsustainable rally
Fundamentals
Petrobras has seen an 80% rally through March, which is unsustainable. The reason for this is because the rally is based on the possible [ impeachment of president Dilma Rousseff, whose policies adversely affected the Brazilian oil market. While this is good news for the Brazilian oil company, the fundamentals of the company simply do not fit with such a rally.
It still has the largest debt level in the entire oil industry at about £75 billion; it will continue to have legal costs incurred from a corruption scandal; oil prices are still too low to be strongly profitable, and in my opinion will move lower to about $30, which will further fuel this rally to be pared.
Technicals
The stock price has hit a very strong level of resistance in the 4.50 and 4.75 price range, as indicated by the horizontal black lines, and is likely to rebound off this.
There has also been very strong bearish divergence on the RSI, which is all indicated by the thin black arrows.
Petrobras has seen an 80% rally through March, which is unsustainable. The reason for this is because the rally is based on the possible [ impeachment of president Dilma Rousseff, whose policies adversely affected the Brazilian oil market. While this is good news for the Brazilian oil company, the fundamentals of the company simply do not fit with such a rally.
It still has the largest debt level in the entire oil industry at about £75 billion; it will continue to have legal costs incurred from a corruption scandal; oil prices are still too low to be strongly profitable, and in my opinion will move lower to about $30, which will further fuel this rally to be pared.
Technicals
The stock price has hit a very strong level of resistance in the 4.50 and 4.75 price range, as indicated by the horizontal black lines, and is likely to rebound off this.
There has also been very strong bearish divergence on the RSI, which is all indicated by the thin black arrows.
评论:
A similar trade to this would be shorting the Russian stock index, which has also seen an unsustainable rally based on oil. However, if you are already short oil then no need...
