BP.

We made a lovely 6.78% return with our recent short position on the oil & gas giant. We had tipped it at 612p in mid-July and last week the price had slumped to 570.5p just as out position was up, after CEO Tony Hayward denied that the company was eyeing rival Royal Dutch Shell. However, the technical picture now says that it’s time to buy. City Index Advisory says: ‘BP is one of those headline stocks that has retraced as fast as it rallied last month and is now entering interesting technical territory. Our fair value appraisal indicated an overvalued/overbought situation when the price pushed above 600p (high at 617p) but now that same measure points to a discount of 5.5%.’

The firm also points out that the daily RSI (relative strength index) is at 26, which indicates that the stock is in the oversold range, and that it looks like the 545p mark, which acted as resistance in February/March, could now have turned into support – suggesting that we could be very close to term lows.

ACTION: BUY BP • Target 600p • Stop loss 495p

TIME TARGET: 4 WEEKS