<Does everyone sell the up coming rally,last one prior to the shoulder season ?>
Blonde; good point; as the SI - SD sentiment meter is getting in the "red zone"...
The OSX when it runs - really runs... 30 point legs seem to be where it traditionally shows fatigue. We had lots of basing around 115-120ish so 145-150 looks like a realistic "top" - off of this strength in Crude & the bullish supply numbers. But, untill we see that huge sequential earnings breakout - which I think comes off of Q4, or Q1 20001 reporting - anticipation I don't think we break thru 150 on crude news alone. To do so, I think it would an actual "Oil Crisis" - ie: $4o Oil to move thru 150 before that monster Q4/Q1 "sequential breakout" in earnings & backlog reporting hits... the political pressure on OPEC come their Sept meeting will be "HUGE" imo.- this sets up another crude pullback & a corresponding OSX retrace.
The key here is to allow yourself to to ride any remaining unbridled breakout, but to NOT allow yourself to ride it all the way right back down, or to get sucked into a shoulder season selloff like we had last Sept - when the E&P's were sold as currency to ride the NASDQ breakout & that same scenario could well happen once again. There is going to be a great temptation for momenteum players to cash in this Oilpatch rally - perhaps on the next OPEC meeting given the political pressure pre-election for them to announce production increase & the resulting pullback in crude prices & rotate to Tech for what has become a near traditional fall rally.
The way to play the Oilpatch here imo, is to keep raising stops up tightly right behind this rally - ride any remaining rally, but getting stopped out on any substantial retrace.
- using tight trailing "Stops" is the key here imo.
I've set stops to take 33% off the table on any pullback to OSX 128-130 and another stop order to get taken out on everything on any retrace to OSX 120-125ish. I'll continue to ride any remaining breakout - but, I get stopped out quickly on even a minor pullback & I'm all out at 120. - thus, I get the entire move to 160ish if seen, but also get all the money from 120-128 as a floor.
I still see a great "Hat Trick" play here... as I think we could nearly simultaneously late this year, early 2001 see a new alltime OSX high, a return to near alltime highs in the NASDQ and a new low in the XAU - Gold mining stocks. The "dream" scenario for me is to :
1. Ride the OSX to new alltime highs 155-165 ish(Nov 2000 - Mar 2001)
2. Take the 1/2 OSX money (set tight stops on the remaining 1/2) & rotate to buy the Gold Stocks(unhedged XAU co's)at XAU 45ish
3. Short select NAZ stocks (QQQ puts etc.) at NAZ 4800, or any break thru the old 5000ish highs.
We shall see.... ATW PGO GLBL OII SCSAY etc still look cheap & I like NEV as a "Crude leveraged" sleeper in the E&P side here - poor hedges coming off soon & very leveraged to crude prices - was a $40+ stock in the 97-98 boom.
Also; if FGH holds here at $5ish - technically it's bottomed - I added some at $5 5/16ths here & will chase a bit down - sitting at $4 1/2 for a break to new lows if seen - where I will take a big position. With the income tax refund & asset sales; they've got the cash to survive - the junk bond does get placed imo; they are smart to pull it for more favorable terms and the fact that they can choose to "pull it" versus having to "take it" - shows me they are solvent - that's another bottomish sign imo. While they've got a long road to go and any dreams of any newbuild boom like 97-98 are just that - dreams; surely a good shot to see the mid, even high teens within 9 mos - a good shot at a triple. I merely think that we've reached a bottom as far as negative news & remember, the secondary was priced 30%+ above present prices... so, I like this $4/$5 area - they aren't going BK imo & news and sentiment can't get worse for FGH - it's all priced in here imo... worth a dip & again, you don't have to "like" the company, or management to "make money" playing a sentiment & technical bottom...
Later ~ |
