GaryB; I'd agree with you here... pre earnings blow off and pre OPEC
compliance reporting selling has little resistance here and the shorts have a duck here - a dip to OSX 55-58 seems realistic imho.
Given the traditional 7-10-12% pre earnings reporting , sector selloff and this comment from BHI - it looks to be a given...
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Tuesday April 13, 4:12 pm Eastern Time
Baker Hughes sees downturn this year, may cut more
NEW ORLEANS, April 13 (Reuters) - Baker Hughes Inc. (NYSE:BHI - news), the world's third largest oil services concern, may make further job cuts this year if, as the company's chief executive predicted on Tuesday, there is a further decline in spending by oil companies.
Max Lukens, who is also chairman and president of Houston-based Baker Hughes, said on Tuesday that he expects another 25 percent decline in drilling activity in 1999, despite a recent sharp rebound in oil prices.
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''he expects another 25 percent decline in drilling activity in 1999, despite a recent sharp rebound in oil prices.'' - THAT comment - along with the not surprising sell off into the earnings announcement period, virtually guarantees a 15% +/- retracement imho - still another 10% from today in my opinion.
This is a great example of where the technicals take over.
Fundamentally; there just isn't ''ANY" positive catalyst to move us higher prior to the OPEC - new cut compliance reports. Except, potential upside surprises from a very few companies (RIG FGI GIFI - if petronius is added to backlog) and FLC riding the buyout rumor wave; this is an easy target here during the next few weeks for the shorts. The Institutional buyers want to see behind the curtain and then they will want to see what OPEC has done - as that is right around the corner as well...
Many of us had talked about trimming positions-taking profits coming into the earnings announcement period; as we've been here & done this a few time of late... good opportunity to buy dips for those who did and who are willing to do a little position trading. No major worry to those who buy & hold; Q3-4 still holds OSX 85-100 in sight imho - if OPEC complies.
fwiw; I am only buying 3-4 major position stocks here; sitting on limit buy orders on further weakness in:
#1. PGO - high $12's - (a super value here) and each $1 down...
#2. RIG - $24's and each $2 down (best value in drillers - bar none - compare PE/PEG to other drillers, or CAM WFT etc - a MUST BUY ! on weakness here).
#3. FGI - love it in the $12's- and down - praying it blows through $13 and to the $11's again (unlikely) - as they will ''nail'' the earnings numbers once again. - remember this is a ''gimmie'' trade as FGI all ways sells off with the sector going into the earnings period - but FGI reports at the tail end of the period, well after the damage is all ready done and usually ''pops'' off of its release - nothing different this time - see you back at $15-16...
#4 - I will add to both SDC - internationally diverse, harsh enviroment niche and a value compared to peers - #2 only to RIG imho. I will also add to FLC on any and all weakness here - looking to build a major position - as imho; CEO Webster would have NEVER resigned without getting the opportunity to fullfill his quest in seeing the deepwater fleet financed , built and working in an $18 Oil enviroment - reaping the rewards; - unless; he knew he was not going to get the chance - read ( buyout/merger)... buy FLC on any and all weakness here imho !
Most importantly - I am pounding the ''screen'' on the E&P's people !
E&P's are in the ultimate sweet-spot here !!!!!!!!!!!!!!!!!!!!!!!!
First, they are earning more money - right here & right now; they do NOT have to wait for the Intnl Oil Majors to increase cap ex spending, or for dayrates, or utilization to improve - they are putting it in the cash register right now ! Secondly, they get margin expansion as Rig costs - dayrates and utilization are low and going lower (? - per BHI) - as Rig rates are often 50% of a projects total costs - they are indeed in the sweet spot here..... just do it !
good luck
PS anyone else playing HMAR ? .... coming dead-pig bounce ? a double, anyone on the refi news ? |
