Strictly: Drilling and oil-field services Message Board

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Gold/Mining/Energy : Strictly: Drilling and oil-field services

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To: Tulvio Durand who wrote (8792)	1/19/1998 10:22:00 PM
From: Ms. X	Read Replies (1) of 95453

You and I are talking about two different things. OSX is tradable on the PHLX. The oil services sector (BPOIL) is an indicator(actually called the bullish percent indicator) that combines all of the stocks listed in oil services and monitors how many are on Point and Figure buy signals and how many are on Point and Figure sell signals. If you want to trade OSX you would look at the BPOIL to see what direction it was heading. I'll give you a breakdown as to what the BPOIL has been doing for the past year. If I have space I'll compare it to what the OSX has been doing this year. I mean 1997 into current. January of '97 BPOIL was at the 80% level. It reversed in Jan/Feb falling to 46%. It then reversed up for a short rally until May when it did a nice rally to the 78% level. It took a breather in August and then rallied again to the 80% level. In October of '97 it started a big downslide. (Important note. When the sector is over the 70% level we consider that overbought and would be cautious about buying securities. No buying with unbridled enthusiasm. The reason is clear given the move in October.) BPOIL fell from 80% to 38% in October. It then tried a rally but could not reach its previous highs in August. It then fell even lower to 28% in December. Since then it has fallen to 14%. For the same reason we are cautious when the sector is over the 70% level, we become enthusiastic when it is below 30% level. For instance, given the history, a reversal here gives it a 45-55% room to move to its previous highs. Now if you wanted to trade OSX, and you saw the BPOIL reverse from here, your risk level is limited compared to a reversal up from the 50% area. The high on the sector is 80%. Easy math. I'm not saying it isn't tradable at the reversal at 50% just better risk/reward under 30%. Kind of hard to explain without the visuals. Looking at the OSX, just after the BPOIL reversed down in October, the OSX was at a high of 140. OSX fell to 120. In November BPOIL had a small rally up as did OSX. In December BPOIL reversed down and OSX started a downward slide to 100. With the recent fall in BPOIL to 14%, OSX has moved lower to 90. OSX looks to be rebounding and I would imagine that if BPOIL reverses up, OSX will enjoy the benefit. Hmmmm. I might have to trade OSX now that I take a close look at this. BPOIL is at its lowest level in years and OSX follows it very closely. Hmmm. I'll wait for the reversal in BPOIL. I really hope this helps. For more information on Point and Figure, Indices, etc go to dorseywright.com. Register for a trial and check things out. I'm happy to answer any questions. Sector rotation is very important. There is a NYSE bullish percent that tells you where the market is heading but I'll save that for another time. Cheers

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