Dune Energy, Inc. (OTC:DUNR) Forms a Bullish Pattern
25 Nov 2010

Dune Energy, Inc. (OTC:DUNR) share price is going strongly up over the past two weeks and has in the meantime formed a bullish pattern on its chart which might attract more buyers in the coming days. It is though hard to find good reasons in the filed third quarter report of the company.

Yesterday the shares of Dune Energy closed the market with a 26.32% higher value and saw more than two and a half times higher trading activity than usually. The stock has entered the overbought area, but still the current share price of $0.24 and the under $10 million market cap look too low as compared to the actual sales the company is making. One reason could be that investors do not expect that the sales will grow in the observable future, another could be the not so enviable financial condition of the company at the end of September 2010.

Although Dune Energy reported a positive operating cash flow in the last quarter, overall the business is not giving signals to make a profit soon instead of making huge net losses each quarter. The company is heavily indebted, has working capital deficiency and the total amount of the debts exceeds the total assets. Moreover, the interest expenses are much higher than the direct costs of the operations.

Thus, it looks like traders got encouraged more by some SEC filings from this Monday rather than by the company’s prospects. It has been filed that several directors and officers of Dune Energy have acquired considerable amount of shares of the company. In this particular case this is not necessarily a positive thing, but as it seems has at least positive short-term effects.

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