Douglas; great points - I may be a great bottom ''indicator'' here...
The Bank Index rallied 5% or 7% in 30 minutes or so late today - this is a strong, strong sign of an oversold situation. However, do we need to see a triple bottom here, will we go lower ? For me, I own some great stocks, at good price levels. I am hurt bad, but far, far from down & out... I just lost some substantial trading profits from Aug-Sept; got a little over aggressive - used some margin again and made great money in some trades, but it works both ways when it unwinds... if I would have taken my recent profits off the table - I would be buying solidly here, but for me; I want to see some fundamental strength. I want all the Q3-4 numbers out and even then may wait untill we see Q1-2 1999 earnings surprises to do some more buying. There may be some better bounces and oversold candidates in other sectors (financials without International exposure - S&L's ! and some selected tech stocks - that will NOT be suffering earnings disappointments... I may play some of these areas first; but will then put profits right back into the oilpatch - now unquestionably the #1 sector for upside return in the longterm. I just do not see a major upturn in the oilpatch for 5-6 months because of the earnings being much more disappointing than I expected and it looks like we are getting ''the spin'' on any crude oil statistics - we may not see crude bounce for a few months. It is a good time to buy now for new money. But I allready bought a lot of stock on the end of August - 1st of Sept selloff and traded aggressively - but now have lost virtually all of those trading profits... lots of work to end up where I started and in some cases even lower...
CXIPY will surprise perhaps (a buy here ! - I am tempted ) and also VTS has stated they expect strong results - it is my #1 oilpatch pick - bar none. I may buy some far out VTS calls, in 2-3 entrys over this month if it goes lower; and that will be the only buys I think I will make nearterm.
FLC @ $8 - wow; longterm EPS estimates of $4.00 per share in 2 years - could be $60 in 24 months... VTS will be $35-48 in a year, $60 in 18-30 months... on & on.... if you buy here - there is most definitely a long and bright future, I just have substantially backed off my timeframe... Q1-2 1999 may be the first signs of any positive earnings estimates, or dayrate increases and unless crude goes strongly through $17-18 - we may not exceed the recent mid-Sept price levels for a while...this is a good buy & hold enviroment here; and will be rewarded over time in a big way. RON & WFT having all of their bad news out and near their prior support level is a good play here, but what I am concerned with - is that these big caps are still held in huge volume by the big funds. I think the small caps have been washed out here - a true bottom, all the sellers gone, but they stand to have the largest earnings disappointments... are they all ready priced in ? The big caps however; may get sold just for liquidation purposes from overall market weakness; SLB is a great example - it never really participated in the Sept bounce... If we see a big reaction to a Clinton Impeachment or another LTC comes out of the woodwork, or if the FED doesn't cut again - who knows what we could see ? I am stepping aside to let this unwind here... Also; the FED appears to be waiting for this to unwind before cutting rates.
I am as confident as ever; if not more so - in my ability to pick good companies/stocks - but, I just think their is a historic amount of negative events (Impeachment, Hedge Fund debacles/LTC, Yen-Japan, Fed rate cuts, and Earnings disapppointments) that make this a humbling market to trade... I'll hold here for 5-6 months... I may make a few buys, very few and only after the tax loss selling is done...
...and in Tech; what bargains, we will ultimately have a very nice rally here; strong bargains overall in tech & domestic Financials... There are some Tech companies sold off worse than the oils and some with $300 Million in cash with $5-600 Million market caps ! unreal... not a bad time to buy STEEL stocks for true bottom fishers - must be patient, but US govmt is going to act on steel - bank on this... we have Japan by the ''cajones'' here....
Bottom line - buy the niche leaders like SLB RIG RON WFT; or the mid-large cap growth companies like FGII FLC VTS PGO CXIPY or the smaller niche players like CDIS SCSWF DRQ CLB or any good drillers with strong balance sheets like DO MRL ESV and you are going to be very, very happy in the longterm and should dramatically outperform the overall market, but we must be patient here; and one must buy the financially strong companies able to ride out this storm, that have solid footing in their respective niches...
PS Can anyone really believe what happened to the YEN/Dollar in 1 day - today ? This allmost makes me want to buy gold . A commodities trader said in 30 years he never saw anything like this before... just what does the unwinding of LTC hold for the markets ? - What happens if some major traders know what positions LTC must unwind and take opposite positions - magnifying the corrections of their positions - this is dangerous... we do not know what may happen here... bottomline; to those who were not active in 1973-4 or 1987 - this is our [tour of duty'' - our Financial ''Hamburger Hill or Normandy Invasion")...never forget the lessons here; they are indeed sobering ... |
