You can't often buy shares in an established North Sea oil producer valued at just over a third of the sector average, where oil production is forecast to double this year and rise by half again the year after.
- Doubling oil production in 2013
- Major chart support
- Strong cash-flow generation
- Cheap valuation
- Large debt pile
- Oil price weakness
- Project development risk
Yet such is the case with Ithaca Energy (IAE), whose share price slumped to a three-year low last week but has since bounced off a major support level around 100p. This is very significant because each time the shares have previously touched this level - in June last year, October 2011 and August 2010 - Ithaca's share price rallied strongly to produce double-digit gains. Moreover, the 14-day relative strength indicator (RSI) - a momentum oscillator - is now in deeply oversold territory and at a depressed level which coincided with the start of the three aforementioned rallies. Another multi-week rally looks imminent.