Mixed Signals & the basing mode...
Not too bad of a day; with the last major analyst to downgrade accross the board MSDW - and did so with an allmost apologetic ''qualifier'' - noting so they could be more aggressive in the 2nd half of the year... RDC gets upgraded to a strong buy - this is a salient point here; we are not going to be traded, or valued by the Street on ''traditional'' PE's, EPS etc... obviously; no one could upgrade RDC to a BUY based on traditional valuations. RDC is a BUY based upon is assured survivability here, low price to asset replacement cost, price to cash flow and most importantly on its valuation as compared to forward expectations & earnings capabilities...
Overall; still a buy into the dips scenario imho. We are basing, individual stocks are finding support; many are well above prior lows, many right at the lows and a few still substantially above... SLB & RIG look good & safe here; I think sellers will be all ''bled'' out here soon. I would think we will once again - post earnings season; begin to trade up into another 20-30% rising trading range. However; the reason one has to be ''in'' here is the upcoming OPEC meeting.
Mike from LA had good points on Chavez having an opportunity to exert his influence; and I believe I am seeing more signs of pain from OPEC; I expect to see new additional cuts; if so - we bounce strongly. The good news; is no positive expectations from this meeting are built into these stock prices - so there is no downside/all to the upside... Even without OPEC cutting, we are slowly falling to supply levels near last years levels. All of the OPEC cuts, production cutbacks and shut ins are taking effect - albeit somewhat slowly. In 6 months with just this alone; we will have supply numbers indicative of $15 crude... This is at worst, a great longterm, patient value investing entry point; probably another 20-30-40% trading range and at best, if OPEC cuts; a solid leg to a run at OSX 85ish by July 4th.
Only time will tell, I'm seeing many, many positive signs showing OPEC's sense of urgency in doing something now and would expect some buying shortly, leading up to the OPEC meeting. We saw the selling for month end window dressing; now the MSDW downgrade - smacks of being a little bit of a ''shakeout/shakedown'' imho. I expect a 15% spike in days - have too with such a ''driver'' being so close (OPEC meeting).
Patience is the most rewarded virtue here; watch for the news spin coming - if it happens - I say buy the hell out of the dips; because anytime the Street has been guilty of ''trying too hard'' - their motives were to drive prices lower in order to buy... |
