Thursday, March 16, 2006

ERHC A 'Penny Picker's Dream,' Market Vibrations Newsletter Says

A highly positive and seemingly very accurate technical report on ERHC Energy released yesterday says the stock will meet resistance at $1, but has the goods to get past that significant threshhold.

Here's the Larry Rosenfeld letter on ERHC:

ERHE.OB: A Pennypicker's Dream
Mar 15 2006 11:51:58 pm
Stock Market Analysis by Lonny Rosenfeld

Whenever one invests in a penny stock there is always that slight bit of hope that this will be the big one. Everyone dreams of investing in a stock and having their initial investment triple, or quadruple in value. This has been exactly the case with shares of a small company known as ERHC Energy Inc. (ERHE.OB). ERHC Energy is an OTC stock. OTC stocks are stocks that do not meet all the requirements to trade on the big boards. Because of this penny stocks can often be very unpredictable, many come and disappear from the radar all the time. ERHC Energy is here for the time being and is looking very strong.

For those of you who are wondering what this company does, this is from Yahoo (YHOO) Finance: ERHC Energy, Inc., an independent oil and gas company, engages in the exploration, exploitation, and production of oil and gas reserves in the Gulf of Guinea offshore of central west Africa. It has rights to working interests in exploration acreage in the Joint Development Zone between the Democratic Republic of Sao Tome and Principe, and the Federal Republic of Nigeria, as well as in the territorial waters of Sao Tome. The company was formerly known as Environmental Remediation Holding Corporation and changed its name to ERHC Energy, Inc. in 2005. ERHC was founded in 1986 and is headquartered in Houston, Texas.

Now that everyone has been acquainted, I know some of you are thinking: is it too late to get in? The price has already tripled in value. Well that is the thing with these OTC stocks; you never know what is next. I am prepared to look at the stock from a technical basis and give my opinions on what may or may not happen.

Looking at the 1-year chart, it is very easy to see where ERHE.OB will have some problems. The first of these problems was tested today; this was the $.95 resistance area. Shares managed to spend most of the day trading above this area, but it seemed that shares were just not committed, at least yet at making a run at the all important $1 area.

Towards the end of the day, as I had expected, shares backed off and closed below the $.95 resistance area, but above the $.90 support area.

As many of you already know, the $1 level is a very important psychological area to break. Investors tend to get nervous about this area and I have seen many stocks get so close and then drop like a rock. I would expect to see ERHE.OB make at least one more run at this level. If this level is breached, expect to see an even further push to the upside.

On the downside, there is support at $.90 as I have previously stated, as well as at $.80. Given the very strong run that has taken place, it is very possible there may be a short-term pullback as many decide to bail and take their gains. Even if a pullback does occur, the momentum is clearly to the upside. If shares fall below $.80, the momentum may begin to shift.

Remember to keep an eye on all of the support and resistance levels I have mentioned above, these levels will set the direction for trade in the short term.

If you have any questions or comments on this article, please post them in our forums.

No comments: