Crude Oil prices being tied to patch values ...
75% of the time this is 90% right; but now - just like last fridays rebound we will have a fundemental bottom where pure values will supercede the obvious weakness in near term crude pricing. Fund managers, investment bankers, hedge fund managers and professional traders will evaluate how they feel about the direction of the overall market; especially the S&P 500 during the next 48 hours. Meetings will be held, lists will be made, remade, torn up and made again.... in the end; FUNDAMENTALS will prevail. The risk vs. reward vs. time frame formula will show the oil service & driller stocks at the top of the list. We will see strong sector rotation and some short covering once again. FGII, EVI, RON, RIG, are solid fundamental buys and will get strong support off todays prices. We saw big volume in FGII - again; imho - this is a special situation in that unlike allmost any other oil patch stock, FGII still had many people who were holding at a 52 week profit; they finally sold.
Hand Grenade theory here; one doesn't need to be at THE bottom; when we have stocks that have fallen 2/3 rds left and right - ''close does count''. RIG, FGII, RON, EVI, all looking very, very good. I personally expect a bounce then some sideways trading within 5-10% up and down and then we will bounce off any and all good crude/OPEC news... remember we are facing greatly reduced earnings estimates going forward. It will just be a matter of time before we see FGII @ $28, EVI @ $45, RIG @ $48, RON @ $50 in a soft market with even $12-14 crude going toward $15-6 crude.... they will be there by Q1-Q2. This is a 50% - 100% gain in these without going anywhere near their prior highs. We will see those price levels within 6-9 months - one can not pass these up.... once again; if you don't buy here and you're ''waiting for the bottom'' - are you going to buy on another 15-20% pop in stocks like MDCO had last week only to sell again off a day like today ? You have to calculate a price that you are comfortable holding these companies for 6-9-12 months; knowing that we have some doubles here just for the taking ! - FGII @ $14 !!!! - how long till we see $28 on this one ? EVI low $20's...how long till we read that the Weatherford merger is up & running on all cylinders etc. RON is a no-brainer here and RIG is so oversold with 99% of 1998's Drilling time pre-booked and 75% of 1999's....get real at $30 bucks !
Gotta have faith in the numbers - we're here .... the technical double bottom is what the Institutions were waiting for. The hell with crude prices at these price levels ! - just watch.
We now have stocks like FGII at $15; we all know how very easy it will be for FGII to pop to $22 1/2 (= 50% profit !) let alone $29-$30 (= 100% gain) on any positive news. Weigh the absolute downside - say $10 which is a 50% loss versus the much more logical and prior attained upside of 50% to $22 1/2; let alone the 100% upside to $30; does anyone really think FGII won't see $30 in the next 12 months ! On margin here - that's a scary return !!!!!! time to get speculative here personally. Margin and calls at these levels are surely speculative. BUT; for those daring souls - the odds may never, ever be this good again. FGII @ $15 on margin going to $22 1/2 in the next year doubles ones money or more.... Will that get any of you ''well'' from prior oil sector selloffs ? I am going for it....don't recommend it for you kids at home, but sometimes a man must look himself in the mirror and say; damn..... I KNOW that I can put my ass on the line here and I will WIN. I have no FEAR or HESITATION at these price levels - you just gotta do it. - If there is any trembling in that finger on the ''buy button'' when you click that mouse....then it's not the right thing. I couldn't push the button fast enough here - DONE; here is where I make my stand. Im loading into ole' Friede G with both barrells. |
