Rory; remember that selling I did; now I can see where BHI bottoms...
and potentially turn some of my 2,3,4 % losses into some really nice gains off of VPI yesterday & now BHI today.
This is an EXTREME time of volatility in not just the shareprices in the Oilpatch, but commodity prices and especially sector sentiment.This volatility is going to offer continual opportunites for longterm buying, or trading. Keeping cash-buying power here is paramount imho.
I have come to the conclusion; that unlike some prior bottom-selloffs of late; this one "IS" different - it is NOT one to leverage into with full throttle margin as I have done on occassion in the past.
The reason is 3 fold:
1. Momenteum Money:
... much of the selloff here is from that sucking sound we heard & saw the results of - when all the mo-mo money left the oilpatch, taking profits and going to the NASDQ & DOW move.
Sure they ignored the still very positive fundamentals here - but this supports my theory; that it is equal, if not even more important to effectively trade the traders - than it is the stocks ! - knowing what Big Money is going to do and why & when; is equally important as having a clear picture of the fundamentals here.
2. NG prices:
...sentiment that is virtually all weather related. NG fundamentals and prices are still solid. Amazingly - top sector stalwarts like NBL are at a 5 year low ! - a 5 year low with current NG prices where they were at in their 5 year "high" ? - can you beleive that anomaly ?!?!?! - this is the classic case where reality & fundamentals do NOT matter; if you don't honor & recognize that the Big Money is not focused on reality & fundamentals here - merely on momenteum. - recognize when it is more important to trade the traders than the stocks.
3. Volatily = continued opportunity:
... more than the prior mini cycles,waves, or trading legs; we are in a much more complex cycle. Volatility is everywhere - oil, gas prices; the overall market, Y2K, Iraq-OPEC etc.
Margining into prior bottoms when both Oil & Gas prices were both strong and sentiment in the sector was still bullish and most importantly - when momenteum money was still here - was prudent. But, now we do not have the momenteum money here & Nat Gas prices have been a huge factor to both OSX & E&P selloffs.
Keeping some margin - and maybe using it for day, or 2-3 day position trading will pay off here as we can take advantage of individual stock one day meltdowns like HAL had and like BHI is going to have again today...
This is a period of irrationality - it only makes sense to keep buying power/cash flexibility here to not only mitigate risk in this riskiest of risky periods in the oilpatch; but to take advantage of what I think will be irrational buying opps like we may see in BHI today.
I may make a huge bet in BHI - I will leverage in with limit orders well spaced - maybe 7% apart; with my full position not being triggered untill a 21% move down from here (in case of a real meltdown-capitulation) which will give me a cost basis of 14% lower than the opening, or my initial entry price. This assures me of getting at least a "taste" in BHI if it quickly recovers and assures me of not loading up on the initial dip - only to see it pull a "MDR" - (lessons learned (VBG). Also, by keeping some cash/buying power here - maybe I get to be much, much cheaper than I sold - ala~ being able to take some 2,3,4% losses - I was able to buy VPI even cheaper than that yesterday; giving me a near crude oil pureplay which I am rotating into as well. This was a blessing in disguise; I have a better value and am in a better subsector within the E&P's than what I sold from.
Also, maybe BHI scares the market - and we retrace here again in the OSX ?
... my point is this is not going to end. This is also not a time to chase moves - there are plenty of rotation, or laggard opportunities here - and you are not going to miss any buying opps, or moves here because of all the still remaining opportunities. If the drillers break out and run away - getting too pricey; you still have the fab's, the small cap E&P's - or soon some real, real cheap NASDQ stocks perhaps (VBG)~
Stay flexible, stay nimble - and keep some major buying power cash handy if you are a trader - as ala~ BHI today, there could be some real nice individual trading opps...
I may make my year on BHI here - thank you Oilpatch Gods... |
