BG drills down

BG Group is expected to unveil robust earnings this Thursday. Strong production figures combined with solid commodity prices mean that most analysts are predicting positive results.

But shares have weakened in the last two weeks from their October zenith of 380p, to a slightly more cautious level of 354p. So can we expect the slide to continue, or will this week‘s trading statement strike a more positive note for investors? The charts reveal that an important level is close.

Spiralling oil and commodity prices have buoyed all year. Rising from below 300p in January, shares soon tested 350p before falling back again. In fact, the 350p price level was tested no fewer than six times before shares finally spiked up in September. Investor excitement was deserved as BG Group exploded higher, reaching 380p in a matter of weeks.

But just as the stock looked set for 400p, oil prices faltered and shares stumbled back to 360p. Thoughts of Thursday‘s results sent jitters through the share price, and despite positive Broker rhetoric from JP Morgan, Deutsche Bank and Williams de Broe in the last few days, BG now rests just above that well-tested 350p level.

So what next for BG? Positive figures combined with technical support at 350p should underpin shares, pushing prices back up to 360p, then old highs at 380p. Above this 400p is an important target.

Only substantially worse-than-expected results this week could force shares back beneath 350p, signalling a major shift in trend. If shares close beneath 340p, next support will come at the psychological 300p.

Stockwatch is written by William Akerman of Quantigma. For more views on techical analysis, go to www.quantigma.com.