TRANSGLOBE ENERGY
You can tell that Transglobe Energy is having a little bit of
a problem these days as oil prices head up, most oil com-
panies are going up and Transglobe is going the other way.
It has a whole bunch to do with politics as this company is
associated with Yemen.
We don’t know whether it’s just a handful or whether it
is several hundreds of Al-Qaeda that are creating all the
damage and concern in Yemen, but there are certainly at-
tracting the attention. Today the British and Americans
have decided despite the small numbers of Al-Qaeda, they
are going to be shutting down their embassies and British
Prime Minister Gordon Brown calls the country a “failed
country.”
It’s one of the poorest countries on the face of the earth,
but what next for Transglobe? Good question. First of all,
Transglobe has been moving a lot of its operations to
Egypt recently and two-thirds of their production now
comes from that country and it’s growing there.
In the meantime, Transglobe had been getting some
chit-chat that management and some big shareholders
would be probably looking for an exit strategy within the
next twelve months given the fact that they are currently
flirting with 10,000 barrels a day, but this little political
problem with Al-Qaeda and all, just might give them the
odd problem or two.
Bloomberg’s on the weekend came up with a rather in-
teresting observation...over the last decade no money was
made in American markets. It’s been a lot better in other
countries, particularly the Brit Countries, but still, it made
Bloomberg ponder the fact that suddenly you are learning
that it may not be that easy to make money in the markets
and secondly, the old strategy of buy and hold might be
passé.
In the meantime on the weekend, well-known technical
analyst Don Vialoux had some thoughts on what next for
the markets as he wrote in the Financial Post, “Equity mar-
kets are expected to follow their traditional four-year Presi-
dential Cycle, implying strong equity markets in the first
half of the year followed by a sharp decline into the third
quarter, followed by an important recovery beginning in
November.
A major reason for weakness in the third quarter is an-
ticipation of the U.S. mid-term election in the first week in
November.
Historically, political rhetoric escalates in the third quarter prior to the election. Equity markets respond to disap-
pointment about the ability of the President and Congress to pass promised legislation successfully.”
Meanwhile of more interest to us is Vialoux’s thoughts on seasonal influences as he writes, “Equity markets on
both sides of the border are expected to follow their traditional seasonal pattern in 2010. Look for choppy markets
during the fourth-quarter earnings report period in January and early February, followed by gains into early May in
anticipation of strong first-quarter results. There could be a significant decline from May to October, followed by a
strong upside move in November and December.”
He adds, “The best seasonal sector play in 2010 likely will be in the energy sector. Colder-than-average weather
this winter will prompt energy prices and energy equity prices to move higher during their seasonally strong period
between February and May.”