Does the name Royale Energy, Inc. (NASDAQ:ROYL) ring a bell? If you're a regular reader of the Small Cap Network site or newsletter, it might. Back on February 3rd, yours truly penned some bullish thoughts on the way ROYL was acting at the time. Given what we had seen up until that time, though Royale Energy had not yet begun to rally, the stock was getting within reach of a monster-sized breakout. Well, that breakout may be underway as of today.
Just as a quick refresher, ROYL is a small cap stock from the oil and gas industry. Specifically, Royale Energy, Inc. is working to develop gas wells in California, and oil wells in Alaska. There's not a lot of production now; the company has only generated about $7 million in revenue over the past four quarters, versus a market cap of $42 million. But, there's a lot of potential production on the radar, which the market is now starting to see... in spades.
How do we know that? The chart. In fact, the chart is the bullish part of the ROYL story here.
When we last looked at Royale Energy, though shares weren't above $2.79, it was pretty clear that the $2.79 mark was a major technical line in the sand. That level had been bumped six different times, and hurdled once (the February 3rd surge), yet for some reason shares couldn't stay above that level. If they could get above that line, though, look out above, because that would indicate a major paradigm shift in the way the market was thinking about ROYL... a bullish shift. Well, we finally have that shift. As of today, the stock's above $2.79. From here, the bulls are free to roam about the cabin. Take a look.
What was the prompt? Nothing, which is actually a good thing. If a small cap stock moves on news, it's usually a short-lived move, as news-based hype fades pretty quickly. When a stock moves organically though, those moves are usually built to last. Translation: Time to wade into Royale Energy, Inc.
To put things in perspective, the weekly chart shows how methodical and well-reasoned the turnaround effort has been unfurling for this small cap stock. This is a V-shaped turnaround with a lot of technical support and plenty of technical bullish cues.
Point being, we should take the reversal effort at face value.
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