Santos (STO) is a $30 billion provider of natural gas and has one of the largest exploration and production acreages in Australia. Energy stocks have moved higher this year because of ongoing issues with supply across the globe.
“The reduction in gas supply because of the Ukrainian war, along with underinvestment in fossil fuels should see gas prices stay elevated for longer,” Michael said.
“Santos is one way to gain exposure to this and the charts are telling me that there is more upside from here.
“For a number of weeks now, I have noticed that Santos was trading sideways despite the overall market weakness.
“It was making ‘higher lows’ [as shown by the] diagonal blue line, but it encountered selling pressure every time it got near $8.40.
“In order to buy it, it was just a case of waiting for the selling to be finished.
“That is, an upside break above $8.40 would be the signal to buy.
“This upside break finally occurred this week (circled).
“This is a clear buy signal as Santos should resume the uptrend from here,” Michael concluded.
Santos Limited (STO)
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