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Gold/Mining/Energy : Strictly: Drilling and oil-field services
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To: The Ox who wrote (34421)1/7/1999 3:36:00 PM
From: SargeK  Read Replies (4) of 95453
 
Michael,

I dumped today. Now into 100% cash. I'll leave the cream for the rest of you. I like to take mine out of the middle of the cycle.

Reasoning based partly on a recent issue of "The Kilplinger Washington Letter" which in part says:

"These low oil prices are going to be around for quite a while. Figure on oil hovering around $11 a barrel for several years. That's 35% below a year ago and 380% lower than at the peak in '81. What will keep oil low? Depressed demand and glut of oil. Technology has made extraction more efficient. New techniques get oil out of the ground for just $5 a barrel, compared to $16 in '79."

This translates into less work for the producers and firms that supply them, such as drillmakers.

"Imports will be a continually rising share of U.S. consumption. We'll buy cheap oil from abroad and save ours for higher prices later."

This and other available information translates into a volatile OSX sector as far as the eye can see. I will continue to trade the cycles which are becoming fairly well defined. Incidentally resistance for the OSX in this cycle is "63". I found myself content with "60" since the downside now poses more threat than the upside potential - near term.

K
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