Ouch!!
I've been hit by a truck before, but never had the sucker back up two or three times!!
My humble opinion: (which will probably be incoherent as a head cold is having its way with me):
1. We had the mo-mo guys buying with us, pushing the stocks higher than they should be. Felt great having the wind at our backs!! Now, not only have the bullish mo-mo guys left, along with Funds taking profits in (what used to be) one of 1997's hottest sectors, but the bearish mo-mo guys (short sellers, hedge funds) have piled on, pushing prices lower than they should be. Anybody remember the declines last January?
2. As far as Funds leaving this sector because "all the good news is out and no upside surprise left," this is a real joke. These Companies have their 98 earnings locked up - what other sector can say that for 1998? I believe we will hear innumerable earnings downgrades (due to SEA and other factors) over the next six months in other sectors, making this sector once again attractive.
3. Saudi noises re: pumping more, etc. First, discount alot of this as pre-OPEC meeting posturing. Saudi Arabia is firing a shot across the bow to all quota cheaters. None of the OPEC guys want prices to fall; they would like to increase theur quota a little and have everybody stick to their allotment.
4. Re: All Majors stop drilling because Saudi Arabia will simply turn on the taps. Uhhhh, I don't think so. Didn't somebody just spend a bajillion dollars earlier this year on GOM leases - are they simply going to walk away from this?
5. Slower growth in SEA will impact energy demand, but just slightly (IMVHO). Also, the Majors are looking many years down the road, trying to replace reserves.
6. Fundamentals are good to look at; but if one ignores momentum and sentiment (and year end Fund selling) you still will get hit by a truck.
7. A sign of a good thread is tolerance for differing viewpoints (as long as the poster is not a complete idiot/as$%ole). scname is not being that obnoxious and will probably make some money shorting - but only because of momentum, certainly not fundamentals.
For the record, I own lots and lots of VRC, NE, PKD, GLM, NORT, FGII, GW, SESI, MIND, ESV, EVI, BDI, CDG, MDCO.
This sector will turn; let the shortsellers have their day. I hope to be more nimble at the next top in this sector.
Good Trading
Mike |
