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Politics : Idea Of The Day
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To: Judy who wrote (17490)3/22/1998 8:12:00 PM
From: Judy  Read Replies (1) of 50167
 
Oil driller/service stocks have found bottom (con't)

To continue the thoughts of last Friday:

Message 3783284

Since Friday's close of market, OPEC has decided to cut the production of crude for the rest of '98. Hence the oil driller/service stocks should see further upside momentum. As for whether this will last or fade, the momentum should subside and the stocks retrace down and consolidate. Reliable bases/bottoms are not formed in a single day or week and take time. I'd expect the sector to consolidate and the trading ranges of the indiviual stocks to constrict. The key whether the bottom has set will be evidenced by low volume sells during program sells or broad market selloffs ... that shall confirm whether recent institutional buys were by value or momentum players. When value buyers step up to the bat, they do not assume overall market risk for a measly 10-15 percent rise ... value buyers hold for the pot of gold at the end of the rainbow even as the momentum buyers flee. It is the value buyers who will set the bottom for the sector.

When a sector approaches bottom, the strongest are the last to capitulate as evidenced by the recent price volume action in SLB, HAL, RIG and NE. Note the automatic dive below their 200-day ema in one fell swoop and panic buying that ensued returning them to that key level. No doubt that the price of oil will rise again and stablize, the question is when ... next week, next month, etc.
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