Three Reasons Why UVSE is Pricing Lower
I'm getting kind of bothered by the high volume of misunderstanding and ignorance on this board, so I will forgo my usual humorous posts about not showering and revert back to being an academic so that I can explain why UVSE has been pricing lower.
Reason #1: The price of oil
Oil futures have declined substantially this week, whereas the financial stocks, which have been down between -40% to -50% since January 2008, have shown some recovery. The lower pricing in oil directly correlates with the lower pricing of UVSE. As an oil and gas exploration company, Universal Energy's stock performance is directly correlated to the pricing of oil. It is a generally accepted observation that commodities pricing has a close correlation with those companies involved with producing or retailing those commodities. For example, if the price of titanium dioxide increases, then the stock of the company which produces titanium dioxide will increase as well. The same can be said with other recent examples such as the gold producers/miners, the steel producers, and so on and so forth. An increase in the underlying commodity price will increase the stock of those companies which produce that commodity, since now their products are worth more and thus generate more revenue. A decrease in the underlying commodity price will decrease the stock of those companies which produce that commodity, since now their products are worth less and thus generate less revenue. With oil pricing pulling back since the beginning of this week on news that the Fed might raise interest rates and thus strengthen the dollar (a strong dollar means lower oil prices; a weak dollar means higher oil prices), most if not all oil-related stocks are also declining as investors and traders are less certain about the bull run in oil commodities.
Reason #2: Pending Developmental News about Lone Oak Drilling
The fact that the Lone Oak drilling project is still in a developmental stage (they are drilling their first well there), and the fact that the drilling project has yet to be completed, has left the stock in a stagnant pricing position. As news remains pending about whether the project is successful, the stock price will also remain unchanged if not slightly downward-trending. It is more probable that people wait for a confirmation before buying. That is to say, people are waiting to buy after the positive news is released rather than buy before and risk having their funds exposed to the stock's decline if news is negative. The fact that the drilling project is still incomplete will lead many potential buyers to wait, which is beneficial for those who get in early since we have gotten in a lower price than they do. When UVSE does in fact strike oil and gas, and when people start buying in and sending the stock up, those who bought in early and were patient will be able to sell for their own profit. Those selling right now are either impatient about the stock or they are pessimistic about it. I would argue that there are very little people selling right now, and that most trading action this week has been perpetrated by traders flipping the stock for quick gains. The low volatility since the start of the week and the fact that UVSE consistently remains level at around 0.022 lends evidence to my argument that there is NOT a sell off occurring. We are presently witnessing a period of uncertainty and stagnation as the news about the drilling project remains pending. My claims are backed up by the candlestick behavior, showing mainly indecision between buyers and sellers each day since the beginning of this week. Notice the short body of the candle and the short yet equal length of both the wick and the bottom shadow.
Reason #3: U.S. Economic Recession
It is accepted by now that the U.S. is in an economic slowdown or recession. And so, if U.S. citizens are not as prosperous as they were before, it necessarily follows that less and less people will be investing in stocks. Additionally, there is less and less money being invested in stocks from those who have been investing in stocks. It is also a fact that UVSE is a tiny U.S. company, so it is much less likely for it to be traded by people in other countries. Therefore, the low trading volume and low amount of action in UVSE is understandable, since there are fewer people investing in the stock market during this period of economic slowdown. Even Jim Cramer himself has become incredibly pessimistic about stocks, if you read the other post about what he said on his TV show. The perspective now is shifting towards more conservative means of saving one's money rather than betting that a tiny oil and gas company will strike oil. Take note that although we are in tiny pennystock land, penny stocks are still influenced by larger macroeconomic conditions though the beauty is that they are not as influenced. UVSE has held very well considering the massive downward pricing of oil. Many of the larger and mid-cap sized oil and gas related companies have declined heavily, and the entire energy sector is down -1.84% today, the second largest sector loser right after Basic Materials, which slide down -2.22% today. Lowered prospects of economic expansion will have an adverse effect on Basic materials stocks, and lowered pricing of oil and gas commodities will have an adverse effect on oil and gas related companies.
OH GOD it felt good to get all of that off of my chest in a non-goofy manner. Now please, stop bickering about NITE and worrying about sell offs because what we are seeing right now is the culmination of lower oil futures, lower economic growth, greater economic instability, and also a company pending results. Once those results come in, you won't find me here on Investorshub because I'll be in the Bahamas with my $33,000 surrounded by the most beautiful women money can-convince-to-have-drinks-and-sex-with-me. Weeeeeeeeee
Let's gamble.
