George, Marc & MARK - Whoooooa Nelllllieee - there is good news here !
This 4-peat/quadruple bottom, or what ever you want to call it has a very positive side to it imho. Also; the formation of this bottom is quite different than the last 3...
Perhaps this is just my personal view; but I, for the first time in a year; I feel that I have the absolute pulse of the Oilpatch. I have been trading what I view as an all most absolute defined trading range that has 'gently' rolled from 45-48 to 55-60 here of late since the Sept Market blow off.
This is the first decline that has not scared me to death. This is a controlled descent. I have traded this move since November pretty effectively; as I should have - having lived & died a 1000 lives in the Oilpatch over the past year... But, this ''IS'' different. There is more control here, there are pockets of strength, there is NOT huge dumping - where stocks selling on the average 1 million shares a day are just flowing ''red'' with 2-3-4 million share days. sorry; George, but I view this controlled, low-moderate volume descent as a strong positive. We don't have a week of -3%, -5%, -7% where we took 15-20% hits in mere days. This is a trading range where buyers are in & out; prior to and in advance of news events. The Street is intent on NOT missing a move here, but it is also, conversely NOT going to take a 20-30% bath either. My philosophy has been to enter a little early; buying into the declines as we near bottom supports in individual stocks, in 3 buy ins. IE: RON - I start buying at $25/26, then again at $23/34 and save the final 1/3rd buy in for either a new low, or at about $22ish. If we turn in the mioddle of a move- I sell 1/3, holding a 1/3rd for a major move - however; this is what is easy; without ''new'' OPEC cuts or a series of 2-3-4 weeks of steady fundamental declines in supply and positive API/IEA numbers; I know we are NOT topping out on RON past $30 - 34; hence I start selling at $27-30.... I want the middle 1/2 to 2/3rds of the move. If I get to buy near the low - I keep a little in the longterm hold portfolio. If I buy RON here at $25 and $23 and then we turn upwards next week; I'll start selling at $27 and then again at $29-30, but I'll keep at least 1/2 of the shares I accumulate at $23 longterm and will not sell. RIG is another easy trading range stock; buy $24-27 max, and sell at $29-$32+... VTS, PGO, have been good traders here as well... I hope this makes sense to someone and is helpfull...
IMHO; If you are not a trader - don't worry here; this is not on the verge of collapse; we had way too much buying support in OCT & NOV & JAN with 3 30-40% + moves; irregardless of if we go to a new low be it OSX 36-40 (which I do not see) we will once again within weeks, bounce another 20-30-40% as value players, sector rotation and momenteum players buy - as the MO-MO buyers arrive on any ''tic, or hint'' of positive news, be that Oil prices, API/IEA numbers, or stock movement. There is NOT an absence of buyers here - that is the main difference versus the collapse of last June & July and this late Aug-Sept. It absolutely ''is'' different here... Also, all of the Cap Ex cuts and projects delays and the OPEC cuts most definitely are having a steady positive effect here. Irregardless of what the demand side does - and it is slowly moving positive; the supply side is gradually self-correcting. The big turn will be on a major catalyst such as prolonged cold temps, new OPEC cuts, positive surprises in IEA/API #'s etc. and they will come... Patience here will be well rewarded. Don't margin here, unless you are extremely confident and have followed this sector all most exclusively since last spring imho. DO NOT MARGIN ! - learn from me; my pain was from margin, not % trading losses. Right now, a my ideal position would be about 60% ''in'' - imho. Also, I would severely narrow the number of companies I buy/follow here on these declines. Many times, I've held as few as 3-4 companies here of late; I can much more effectively manage my buy & sells with only 3-6 companies... I can follow RON, RIG, VTS, PGO etc.with buys or sells at each $2 move - never getting caught too deep in a downdraft, nor missing much of a major move. I also, have cash on hand for special situations like FEN's blowoff, or the news flash on the GIFI ''opportunity'' etc.
Sorry, for the rambling on.. but; no one here has lost more ''blood'' via death by 1000 cuts than me; and I am NOT ''hyping'' here, no overnight success here; but there are numerous 30-40-50% ''pops'' coming here for the 4th damn time; ask yourselves one question:
In light of the 3 prior clearly defined trading ranges from the total market blow off in Sept, to the present; are there more, or less unanswered questions in the Oilpatch and in the overall market & Global Economy today, than there were back in Sept, Oct, or Nov - Dec. ?
In Sept - no one knew if this was 1929 all over again ...
Was Russia, Brazil, et al going to completely collapse ?
Would the FEd cut rates ?
Would Japan reflate and add liquidity, reform Banks ?
Would LTC bring down our banking system ?
Would Gold go to $500 oz. in this paniac ?
Currency devaluation, Dollar/Yen - where was currency going ?
What would the end of the year ''tax loss selling season'' bring the oilpatch ?
Is OPEC complying ?
Who would win the Venezeulan election ?
Would tax loss sellers turn into tax loss buyers in Jan ?
How would the Q4 & FY 1998 earning be ?
What would the analysts downgrade too ?
Would La Nina arrive - if not, how would crude/nat gas react ?
Would we see $8 crude ?
IMHO: we have one hell of a lot more info now, than we did then ! Are we out of the woods ? - Certainly not, but there is absolutely no fundamental or technical reason to anticipate panic selling; and in fact there are more than a few positive signs that slow, steady growth is ahead; that a triple/quadruple bottom has been clearly defined - So why not trade what the Street gives us; and/or, just sit tight ?
All I know is that for what it's worth; I'm sleeping a whole lot better here. I feel like I am in control here; I am acting and NOT reacting to the market. I am letting these stocks come to me and not vice versa - no chasing here. I pick my companies and prices and as the "Deal Dog'' said; plan your trades and trade you plan... it's working for me !
good luck; and forgive me- but I'm happy as a Pig in Sh#$ waiting for RON @ $22-4, RIG @ $23-5, FGI sub $10, VTS $10-11, PGO here down through $12, WFT $16 5/8ths, SDC $12ish, CXIPY here & down through $28ish... I have to plan solid entries here; if we go down more than 20% from here; then I will hold from the above levels... that is ''my'' plan and I am going trade 'em untill the Street or the fundamantals (OPEC cuts, API/IEA #'s and Crude Prices) tell me otherwise. I all ready know that the Street will buy RIG & RON over $30 from me in this current enviroment - I have ZERO fear buying the dips... For once - the Street wants these stocks more than I do; and they are chasing them up and dumping them down - I know where I want to be in advance and am picking my entry & exit spots accordingly... The key is to act/beat the crowd (Street) both on the way in and on the way out ! - I can not over-emphasize this point. Also; one has to overcome the fear of buying headlong into a selloff - once you do it and win; it gets alot easier. The single hardest thing to do - is to confidently buy right into the face of massive selling; however - this is the one thing that has made me a lot of money of late, both in individual trades; ala FEN - I covered a near double - sold ; and now I have a zero cost basis in the shares I'm holding. Fen is not a good example; as is does not have good fundamentals, but VTS, PGO, RIG & RON are these types of stocks; start buying them where the past 3 runs have shown us that they will trade... I have no fear buying RON into the face of a sectorwide blowoff; I am more successfull; buying into the blowoff, using 3-4 trading/buying intervals, versus waiting for a bottom and buying it on the way up hoping fundamentals have, or will change, only to dump again in reaction to the street turning & selling again...
good luck; I am not the worlds greatest trader; not being arrogant; but I have received what I would call an ''Individual Investors'' - ''Masters Degree'' via the school of hard knocks & Death by 1000 Cuts - this past year in the 'Patch - a long way from my ''Phd'' - but working on it ... |
