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SandRidge Energy Inc. (NYSE:SD) – Short Term Bounce On The Cards

SandRidge Energy Inc. (NYSE:SD) finished the last trading session of the week with a modest loss of 1.84%. The intraday recovery of 10% from the day low suggests that the short term down trend may be coming at a pause and expecting a small bounce now may not seem that much ridiculous. Particularly, the volume surge to 40 million against the daily average of 16 million accompanying that price recovery must be noted for the strong possibility of a short term trend reversal.

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 SandRidge Energy Inc. (NYSE:SD) had reported a poor first quarter result last week and that was followed by a revelation of the company being a target of an antitrust grand jury probe related to its oil and gas properties lease in Oklahoma. That drove the price down by nearly 12% but almost all of that was recovered as mentioned earlier. The company is being investigated by US Department of Justice for possible antitrust law violations related to purchase or lease of land for drilling rights. These transactions took place two years back in 2012, when the CEO was Tom Ward. Similar charges were pressed against Chesapeake Energy Corporation (NYSE:CHK) and Encana Corporation (USA) (NYSE:ECA), both of which settled an antitrust suit for $30 million. That may have been taken by the market that this legal probe is nothing major, producing the recovery.

Technically, the stock has formed a Bullish Hammer candlestick on the daily charts, which must be confirmed with an extension of the bounce back but it still points to a short term bottom. After registering a high around $2.50 in February, the price has not made any higher high or lower low, indicating a contraction. If that is really the case, then the broader range of $1.10-$2.50 may remain unharmed for a few more weeks.

Published by Alan Masterson

Alan has over 25 years of trading experience in the U.S. equity markets. He began his career in finance working on a program trading desk specializing in over-the-counter stocks. His career progressed from that point to his current position as senior trader on an institutional trading desk. In the evenings, Alan teaches economics at a local community college. He has contributed articles to various publications over the last six years, including feature articles for an economics magazine and various financial blogs. You may contact Alan via his email (alanmasterson@wallstreetpr.com) or his Google+ page (https://plus.google.com/103338576216002376250).

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