jimp - re: the "Wacky" market;
Actually I think the "institutions" are who is buying here in the Oilpatch.
Unlike perhaps the NAZ, or at least; to a much more positive degree - I think the Institutions got out of the OSX before the individual investors did.
That intra-day low at OSX 94ish; was probably some stops being run & some margin liquidation. We had & still have a lot of margin interest here.
Fidelity as a fund family; definitely led the OSX exodus from what I saw. They did a hell of a job. They were selling heavy in April & May of this year.
- in a way; did they "call" the top; or make it ?
We all know Fidelity Select Energy as a leading speciality fund and I think that maybe the Fidelity Family of Funds; better than anyone; saw & acted upon what was and is here - mid-cycle exhaustion; a pause that refreshes.
Anyway; I think the Institutions are buying here; as we've had a lot of indivdiual investors shaken out - as well as the casual early cycle & very commodity price oriented Institutional Investor - who diversifies to Oils only as a small exposure play & not a strong weighting, or speciality emphasis.
So far; the OSX is holding pretty good. That Intra-day low to OSX 94 had to shake out a hell of a lot of "non-believers" - that was nearly 50/FIFTY ! points off the Index high.
I'm hoping that Greenspan put a floor under the NAZ here & if we're finally seeing the end of the "confessional" warning season here - and that those confessional warnings are not getting met with 40% immediate haircuts; maybe the NAZ is going to base here for a rally when few expect it ? - same with the OSX... we initially ignored the Nat Gas spike; disconnected from rising crude; so now that we've shaken out the casual Institutional investor & ran the stops & margin squeezed the others; maybe now - the longterm Institutional Investors will accumulate here & we'll ride the coat tails of an End of Year Broad Market Grenspan endorsed Relief Rally - with added relief/sentiment from a Gore concession soon ?
There are a few stocks like CDIS - that is NOT a big individual investor stock here - getting nice buying action. I like the selective buying that is going on here in a few mid-small caps plays. ESV up nice, land drillers still strong, E&P's - especially small caps reacting well to nat gas - allthough if they see that speculative pop to new highs - I'm a short trader there; but all in all a relief rally bounce to OSX 120-125 if Crude Oil stabilizes here at $28ish is looking good...
Offshore drillers will be a huge upside play - doubles; if there is "any" legs left to this multi-year oilpatch expansion. MRL ESV RDC RIG FLC ATW very, very cheap - so is DO NE SDC - the whole sector is cheap... $30 MRL ,$40 ESV , $35 RDC, $50 RIG, $45 ATW are spring rally chip shots if we get one... those are 50% moves...
If we only had more info on how "soft" the US Economy is going to land in mid 2001; this would be "Margin" territory on any & all weakness - but, without that news/info - it's gambling & not investing ... I'll take a 50% pop on a 40-50% invested position at this late stage in the cycle.
Could we still see OSX 80 - even if this is just a mid-cycle correction ? - yes. That's why it's not "max, or even margin" territory; let alone "fully in" territory imho. One has to use stops here & then pick re-entry spots. I'm moving my trailing stops up to OSX 96-98 from 94 here today. I think if Gore conceeds - we've got a 10 point/48 hour OSX pop coming...and I move my stops up again.
Gold update:
DROOY +8% again today on 2 x volume/1 million shares and PAAS +4% on 3 x normal volume... small caps need to continue to back & fill and they will. I flipped a batch of larger caps for some 9/16ths - 5/8ths DROOY; as they were getting hit initially for their bid to buy some Anglo Gold properties... some thought they were over-expanding & that the required forward selling hedges that may be required as part of the financing package for that acquisition were a negative... but, DROOY remains ,moderately hedged, but supremely "leveraged" to the Price of Gold - not allways the same thing... it also most importantly has enough cash to last about 10+ years at present burn rates at $265ish Gold and is still THE cheapest Gold Stock on the planet on a price of production & reserve basis... DROOY was $2.50 on the last POG Spike in Sept 99; hit $2 this Feb and bounced between $1-1.35 thru the year before this final XAU blow off; it's now my largest Gold holding (HGMCY #2); I loaded at that 9/16ths opp - it simply became the single greatest "asset" play in XAU history there imho. If it merely returns to it's banded range of this past summer & fall (which it will) it's a double off those lows - and it will be. We'll see $2 DROOY again sometime in 2001 and that's a triple.
KGC on any XAU pullback to the low 40's would be my North American small cap choice; it's the most Price of Gold leveraged N American Gold Stock and is the largest 2nd tier player that is also a take out candidate. |
