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TECHNICAL ANALYSIS


Swift Energy Showing Signs Of Strength

08/11/03 08:16:30 AM
by Kevin Hopson

Swift Energy is showing signs of strength, indicating a potential break to the upside from the stock's two-month trading range.

Security:   SFY
Position:   Accumulate

Swift Energy Co. (SFY) is an oil and gas exploration and production company with primary operations in Louisiana, Texas and New Zealand. Technically speaking, the stock has been stuck in a trading range since mid-June. More specifically, the $12.30 level continues to act as resistance, while the $10.60 level continues to put a floor under prices. Since trading ranges tend to be continuation patterns and the current trend is up, I believe Swift Energy could see a further break to the upside. If Swift were to break to the upside in the near-term, the trading range indicates an initial price target of $14.00, which also coincides with last August's high.

Another sign of strength is the red pitchfork. For example, notice how the stock price failed to test the red median line on the recent pull back. Instead, Swift made its way back towards the top parallel line, breaching this trendline on an intraday basis late last week. This is usually a sign of strength and indicates a potential break to the upside in the near future. If this holds true, the $13.00 level - site of the black median line - should only act as temporary resistance before prices move higher.

Graphic provided by: Stockcharts.com.
 
Another thing worth noting is market sentiment towards the stock. For example, seven of the 11 analysts covering Swift Energy currently have a "hold" or "sell" rating on the stock. Additionally, short interest -- though down slightly from June -- remains high. More specifically, there were over 1.0M shares short as of July 8, meaning that it would take roughly 6.3 days for shorts to cover their positions (based on the stock's average daily volume). With the technicals continuing to show strength and overly pessimistic market sentiment indicating potential buying pressure down the road, I would look to accumulate shares of Swift Energy on any near-term 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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