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Gold/Mining/Energy : Strictly: Drilling and oil-field services
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To: SJS who wrote (19791)4/20/1998 9:26:00 PM
From: Thean  Read Replies (4) of 95453
 
Steve, I am seeing the followings:

1. The water drillers are bounced off their upper BB today across the board. Many managed to trade outside their upper BB intraday but again this become ground for profit taking. The reverse is also true. We have seen this phenomenon repeating so many times with the drillers it has become a great intraday indication for bottom-fishing and profit-taking. BTW, almost all water drillers have a rather strange looking candles - five days of higher highs but with alternative color candle each day. I don't know if this is the question Marc asked earlier but I don't have an interpretation for this either. One thing however is that tomorrow will likely decide the trend for the next few days if not next week. If tomorrow we have a lower low and close down with a red candle, then the likelihood of a short term trend reversal is set. Ron's short term stochastics is not all the way up into 80% for all drillers yet but I'm not sure since his site has not been updated today. Ron - hope you are well! Some water drillers that slided pretty bad today include RIG, PDE and GLM. Not a good sign.

2. The land drillers are a different story. Actually there are only two land drillers making most of the noise and they are - PTEN and UTI. These two drillers have great followings and they receive the most mo-mo vote in either direction. Now the intermediate trend is very clear for these two - up. The are in the process of carving out a nice looking U. Net, their base-building process is almost over and unless we go into another big three month dip we should not see a double bottom with two big U's. Other drillers are not acting very well. They include BDI, NBR, PKD and GW. GW is very weak with low volume - sign that people are beginning to throw in the towel.

3. The fabs is the prized group among the oil services co's. Led by FGII and VRC, they are clearing out resistence like the good old time. The perception of $$ regardless of near term dayrate like what Big DOG had been preaching is taking hold. But it is interesting to see if FGII gets a follow-through tomorrow since BIG DOG advice taking profit after close today. My gut tells me that at least half of all FGII traders have BD bookmarked. So this is a serious call by one DOG.

4. Oil appears trapped in the $15-16 trading range. With earnings out one by one and most drillers either matched or beat earning by 1 penny, I think it is safe to say that the fear has been confirmed - the drillers are not making as much money as they were projected to be 6 months ago. Otherwise most drillers would be kicking ass by now since their current quarter earning estimates had been sliced by 5-30% in the last few months. Actually, kudos to the analysts who are pretty accurate this time around.

5. Writing covered calls is the lowest risk way to play the drillers - can't agree more. Nice counsil too on not writing call on FGII until FGII shows weakness because a mega $ deal announcement can easily shoot FGII above $40 towards their old high.
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