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TECHNICAL ANALYSIS


A Possible Buying Opportunity For Meridian Resource

07/18/03 08:50:36 AM
by Kevin Hopson

Meridian Resource Corp. is starting to pull back after running up nearly 900 percent over the last eight months. With key support coming into play below the $4.00 level, speculative investors should look to buy on a further pullback.

Security:   TMR
Position:   Hold

Meridian Resource Corp. (TMR) is an oil and gas exploration and production company with primary interests in south Louisiana, the Texas Gulf Coast and offshore the Gulf of Mexico. Technically speaking, the stock has seen a huge run-up since late last year. More specifically, Meridian Resource hit a low of 50 cents in early November, only to move up to $5.00 in recent weeks - a return of nearly 900 percent. However, the stock started to pull back earlier this month and is now approaching several key support levels.

For example, notice how the top black parallel line and the March '02 high both came into play around the $5.00 level. As a result, it was not a surprise that the stock recently topped out here. However, the black median line is quickly coming into play, meaning that Meridian should find near-term support around the $3.60 level. Additionally, the 38.2 percent retracement level ($3.43) from the March-July rally and Meridian's 50-day moving average ($3.36) should both provide further support for the stock in the short-term.

Graphic provided by: Stockcharts.com.
 
This assumes that Meridian will breach recent support around the $3.80 level, which is site of the dotted green line (or last summer's high). In any event, Meridian should find ultimate support in the $3.40 to $3.80 range if the current correction continues. Though Meridian is a speculative company and should only be considered by long-term investors willing to take on additional risk, the stock does present an attractive buying opportunity at lower levels. In other words, I would continue to hold the stock at current levels and look to buy on more significant weakness.



Kevin Hopson

Kevin has been a technical analyst for roughly 10 years now. Previously, Kevin owned his own business and acted as a registered investment advisor, specializing in energy. He was also a freelance oil analyst for Orient Trading Co., a commodity futures trading firm in Japan. Kevin is currently a freelance writer.

Glen Allen, VA
E-mail address: hopson_1@yahoo.com

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