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: drsvelte who wrote (17120)	3/29/1998 11:32:00 PM
From: Thean	Read Replies (1) of 95453

Last Friday's action was one of a dismal performance since the beginning of the rally. With Monday being the all important OPEC meeting and expected positive crude pricing annoucement due on Monday, last Friday action I believe is the market's way of telling profit taking has intensified started last Friday. After such a powerful rally, traders are bound to take profits. The tug of war of the last 3-4 sessions is basically profit-takers selling to new buyers. Let's ask ourselves here, how many long term players have much fresh money to put into the last rally? My personal feeling is not much. Those who insisted on seeing better days were rewarded last week but they don't have much fresh money to pump in. The new money came from the join-the-crowd-by-standers and the tech money and the mo-mo money. The by-standers generally have no good feel for the flow of momentum and tend to buy at the high of the cycle. The tech money is here short term and will leave if tech becomes hot again. The mo-mo are the momentum swingers and they can change their mind in a heartbeat, like buying on speculation and selling into news. Anyway, I personally think that a furter 10% move up from here is going to be difficult unless NYNEX oil can break through $17.5 and then $18 by Tuesday. If oil is going to trade between $15 and $17, the drillers are again capped within a trading range where 10% from here would represent the ceiling of this new trading range. Why 10%? I'm looking at the charts of RIG and a few other drillers and a month or so till next earning season with a trading range of +10% and -15% from here would be very nice to produce a uptrending U to complete the base building process. If tomorrow is the beginning of a bigger profit taking down cycle, I expect those drillers which have not filled their recent gap-ups to complete it. That would be better anyway in the long run, removing any doubt as to whether a gap needs to be filled. Again, with current worldwide oversupply of oil, it is going to be very difficult to get oil above $18 and stay there. We need oil to be above $18 for good to have a good shot at reaching the old Oct highs. Anyone think oil will be decoupled from the equation? Not a good chance as long as oil does not break above $18 because there will be noises about e&p budget cutbacks. I have been selling into strength last week and my only holding is PTEN. May sell it too tomorrow if prices weaken.

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