BP plc Watch

There's a Facebook page called "Boycott BP", but for traders like us, the question, "When do we buy?"

The oil company BP plc (BP) has seen its stock price fall to less than half it's April 15 value since a the offshore drilling disaster in the Gulf Mexico.

	trend	adx	psar	pps	macd	macd trend	sto	sto trend
BP $37.63

At 12:12 p.m. Eastern

If we assume that the oil spill won't bankrupt BP, that it's business will continue to move in line with the rest of the energy sector, then BP today presents the buying opportunity of a lifetime.

Or not. And that's the quandary.

Some facts:

BP operates in 29 countries. It's not just a few wells in the Gulf.

BP's latest quarter showed net income of $6.1 billion on $74.4 billion in revenue.

BP's most recent estimate is that the company has spent more than $1 billion the cleanup (realizing that at this point, the company's interest is to high-ball the expense number).

It's a lot of money, but not huge when considering the overall size of the company.

BP is big enough and international enough to withstand the wrath of the American political class.

So, from all of that I conclude that buying BP is not a mark of insanity. The question is in the timing.

BP is showing bear phase on all of my major signalers: The macd, the parabolic sar, Person's Proprietary Signal. So, by my rules, this is not yet the time to buy.

The macd, however, is rising toward the zero line, a bullish sign. And BP on May 27 and May 28 showed bull phase on the pps, a failed phase switch that sometimes can be a harbinger of things to come.

Reversal Levels

• $52.00, +38.2%
• $45.57, +21.1%
• $39.41, +4.7%
• $37.63 <== You are here.
• $36.20, -3.8%

BP is extremely prone to news surprises at this point -- no surprise there, it's in the middle of a major disaster -- so moves up and down will no doubt come as large price gaps. My bottom line: It's a risky play for the short term, with potential for huge reward in the longer term.

Keyword: British Petroleum

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Abbreviations:

• psar - Parabolic Stop and Reverse
• adx - Average Directional Index
• pps - Person's Proprietary Signal
• ma20 - 20-day moving average
• macd - Moving Average Convergence-Divergence
• sto - Fast Stochastic

About the glance: The colors indicate the state of each signal.

• trend: Determined by the 5-day moving average, green for up, red for down, yellow for sideways
• adx: orange for above 30-up, blue for 20-down, purple for in the middle. Red is most prone to whipsaws
• psar, pps, macd: green for bull mode, red for bear
• sto: green for overbought, red for oversold, yellow for the neutral zone.

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Tim Bovee, Private Trader tracks the trades of a private trader for his own accounts. Nothing in this blog constitutes a recommendation to buy or sell stocks, options or any other financial instrument. The only purpose of this blog is to provide education and entertainment. No trader is ever 100 percent successful in his or her trades. Trading in the stock and option markets is risky and uncertain. Each trader must make trading decision decisions for his or her own account, and take responsibility for the consequences.

BP's has been hammered mightily