Jim L - you're scaring me lately; I too am looking at TSO & refiners short term
Have you "hacked" into my watch list (VBG) ?
TSO just had earnings revised downward due to poor west coast refining margins.
Refiners benefit on softer crude prices here - and I agree; TSO near $8ish is a great short term play if we see crude retrace further... just looking, I'd rather play more familar names, but the refiners, or even the Intnl Oil Majors may be the play here if we waffle & trade a bit.
Actually; I trimmed to one of the largest cash positions that I have held in the last year - this past week.
per my post last week:
===========================================================
To: Frank who wrote (58021)
From: SliderOnTheBlack Thursday, Jan 6, 2000 1:59 PM ET
Reply # of 58209
Taking lots of margined leveraged profits off the table today...
Holding most of my full cash position, but - the Spin Doctors haven't left - we often see major fund buying on just one day pops - not followed up the next day - often a retrace of at least 1/2 or more of the move. I had to put this one day pop in the drawer.
Fidelity alone could move this sector today on this volume - food for thought for "traders"...
==========================================================
I sold more through the days end & friday.
I am trading on Nat Gas - or rather its weakness here; we do NOT go off to the races in either E&P's, or the OSX prior to OPEC announcing a "formal" extension of production quota's, or untill Winter arrives with a nationwide bang; which is what it will take to bounce Nat Gas prices back to $2.30 - $2.40.
NG has truly become contraseasonal here - its prices and E&P prices peaking pre-winter ...
The market is still not trading rationally. $20-$22 Oil & $2.15-2.20 Nat Gas is very profitable and bullish for the E&P's and will lead to a nice cap ex increase for the driller/service stocks. But; the street is NOT going to move major rotation money here unless the Nasdq & Dow collapse in a major way - and that doesn't look to be happening here. Without a defensive move from a market collapse; we have to "show them the money" - via bottomline earnings, cash flows, increased orders, production, backlogs & growth - period.
This is strictly an individual stockpicking/trading environment untill then. Anyone who made nice buys on the bottoms here is safe in a longterm hold mode, but for trading - I am very glad I bought a margined bottom - but sold on a bounce - because I was not seeing NG rebounding strongly enough.
We may really test $2 Nat Gas here folks - these E&P's will become the buy of a lifetime at that point imo - as they are doing well here, but will see valuations really sold down on a break of $2 NG. The oilier names will be the buys... as crude is not sinking sub $20 - not even a remote possibility and many of these balanced, or crude leveraged companies are going to do real well in a $2 NG & $20 Oil environment, but the Nat Gas pureplays with high debt & interest coverage costs will not and those will decreasing production will be pounded - wait for these individual buying opps. Maybe we see $17 NBL, $28 BR, $13 EOG ? - maybe not... but, if you are in cash and miss these; the small cap laggards are still sitting here.
OSX wise - I just see a trading range untill the OPEC question is answered. We got ahead of ourselves on fundamentals - even when tempered against high expectations. If you look at where ESV, NE, CAM SII etc traded at these valuations & compare to the earnings they had at these shareprice levels prior - we got ahead of ourselves a bit.
The bounce last week look like a prudent margin leveraged profit taking point. The sentiment shifted, crude & gas both retracing - NG on poor fundamentals/weather demand; Crude off of sentiment and rotation died out. It looked like profit taking time; as the return to the ususal pre API selloff game seemed likely.
I missed WG near $4 last week - popped 25% in days... looking for these small opportunities, or major irrational selloffs - trading on the technicals and watching NG here very closely. Up today, but the weather demand further out is NOT looking good.
The kicker today was Merrill lowered their 2000 NG forecast to $2.15 - many analysts still at $2.50-.60. When they join Merrill - E&P's could get hit hard here - especially "IF" we see poor API's - we shouldn't, but a shot from left field is due - isn't it ? BR downgraded at this price ? makes you think... be smart out there.
Watching XTO for a gift, cheapest - low risk E&P with strong fundies here; I pray for a break of $8, or VPI retracing back sub $10 - I'll probably own little else if they do...
In service drillers - FLC GLM RIG - sub $28, PTEN another $1 or so lower, maybe GW PKD on dips, small caps like WG IIR interesting, ; I like seismic on a major retrace here - maybe IO PGO VTS; PGO is interesting here; if the GOM opens up for FPSO's PGO is there. Hoping deepwater plumbers blow off a bit more CXIPY SCSWF CDIS as well as OII. I like picks & shovels mfg NOI as well a bit cheaper. I would be all over BHI sub $20 in a major way as well.
I think we are rangebound, untill weather spikes NG prices, or untill OPEC formally announces the extension of quota's - untill then - be nimble, be smart and wait for individual plays...
JimL - have you followed FST's volatility ? played it a couple times, missed this lates spike - now coming back sub $10 ? - a trader there...if NG is stable. This just turned & ran off of $9 here of late - a major spike move.
OEI could be a gift with their recent finds, if they retrace to the low $7's/$6's again - a real longterm gem there; still cheap here, but may retrace with the sector ? |
