Torchlight Energy Offers Special Dividend, Stock Surges 70%

Torchlight Energy Resources Inc. TRCH shares moved higher Tuesday after the company declared a special dividend of Series A preferred stock.

Late Monday, the company stated the special dividend would be issued on a one-for-one basis to common stockholders as of the close of market trading on June 24.

Torchlight Energy was up 68% at $6.02 at last check. Below is a technical look at the stock.

Torchlight Energy Daily Chart Analysis:

• Shares may be forming into what technical traders would call a cup and handle pattern; the stock has formed the cup of the pattern, but not the handle.
• The stock is trading above both the 50-day moving average (green), and the 200-day moving average (blue), indicating sentiment in the stock is bullish.
• Each of these moving averages may hold as an area of support in the future.

Key Levels To Watch:

• A cup pattern is considered a bullish continuation pattern and may form a handle before the it's over.
• The cup and handle forms after the stock makes a high and falls for a while, but eventually comes back to that high forming a cup on the chart. If the stock can get back above the highs after forming a handle, it could see a breakout.
• The Relative Strength Index (RSI) shows that the stock has entered well into the overbought area. The RSI is sitting at 87, which is well into the overbought range that starts at 80 and goes up to 100. This means there are many more buyers than sellers in the stock.

What’s Next?

Bullish technical traders would like to see the stock take a slight pullback and form the handle on the chart. Bulls would then like to see the stock start moving up again and watch the pattern break above the highs formed by the cup.
Bearish technical traders would like to see the stock fall and form the handle, but instead of rising back up, they would like to see the stock continue to fall. Bears would also like to see the stock fall below the moving averages for a possible trend change.