Yesterday's remarkable performance of ERHC Energy (OTC BB symbol: ERHE) - a rise to $0.59 and a fall to $0.50 with a close eight-tenths of a cent higher at $0.54 on 1.6 million shares of volume - provides a clue to the mysterious forces that seem to move this stock in the absence of news.
ERHE rarely moves up simply because the price of oil moves up, or at least that has been true in the past, when we had the distant prospect of winning oil concessions. Now we have oil concessions, and it may be that like the rest of the petroleum industry, our share price, too, will be moved primarily by the price of crude.
If that's the case, though, why did we also fall three cents to $0.50 yesterday, as oil prices moved to near-record levels? And why did it rise with the oil price o $0.59 and then fall despite it?
Another factor supposedly influencing price yesterday was OPEC's decision to produce an additonal 500,000 barrels of oil daily to slake some of the growing demand by summer drivers. Traders were reportedly happy that the OPEC cartel moved the quotas so little, buttressing the demand side of the demand/supply equation.
But the relatively low volume suggests the most important factor in play was the desire by some traders to play 10,000 or 20,000 or 50,000 shares against the couple of cents of mkovement. One who had 10,000 shares and took the whole round trip from a buy at $0.50 to a sale at $0.59 made $900 for his day's work.
And the fact that some former longs are now confessing here and there that they are day-trading a stock they formerly reserved for longer-term movements is evidence that the quality of the stockholder base, once strong and loyal and very enthusiastic, is rapidly deteriorating into a penny-ante free-for-all.
Well, we expect they will get their penny today. We see the likelihood of ERHE moving within a four or five-cent range all day, and closing perhaps a penny higher.
That pace may continue through the end of next week, with steadily dwindling volume, but I believe we are still on target for a $1 share price before the end of the month. Let's hope I won't have to eat those last few words!
Update, 3:12pm EDT, 6/16/05 The price is $0.54 as trading has moved in a four-cent range from $0.525 to $0.56 all day on lackluster volume of 540,900 shares.
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2 comments:
Hey you old Moron go away...Gt a new life /Leave us alone.
Joe keep going F---k this guy..We all still appreciate you words.
This is why I never go to RB..
I think it was just the fact that they had to pay for the increased signature binuses that impelled the stock sale. They wanted a better price as much as anyone, but they couldn't risk getting a low one because they'd have to sell so many shares.
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