Ahmed, good points; here's some thoughts for the ''sounding board''
from theStreet.Com (of which I get no IPO shares by the way): comments from James Cramer (still love the guy - regardless of not getting any damn IPO shares)...(yes, I do have sourgrapes about getting no soup....vbg).
Cramer:
<<The Net is beginning to exhibit noticeable patterns, by the way, and one of them is that it declines after Yahoo! reports its quarter. Looks like that pattern, now good for four quarters, proved a winner.
(I love looking for patterns. >>
hmmm, ''Patterns'' : we have had a series of patterns here in the Oilpatch of late - all very definable and predictable since the Sept period of this current rolling trading range.
The first pattern was that the Street sells off prior to and into the intial Quarterly Earnings reporting period here in the Oilpatch. The reason is simple, we do not have strong fundamentals ie: rig count is nearly 1/2 of same time last year, dayrates are soft and getting softer and earnings are either non-existant, or in most cases fractions of last year and companies are quite often missing the numbers here. The Street quite conservatively and very prudently has decided not to get caught in any potential downdrafts off of any negative surprises.
What made this Earning period different (so far - it aint over!) is perhaps an anomaly. That anomaly being a simultaneous major 1-2 day market shift to cyclicals. What tempers my enthusiasm short term (keyword short term) is the warnings from many, many top pundits who have said this will not stick - it was a near panic shift led by a few gargantuan fund managers with the mo-mo money following. When this temporary massive buying support stops (and they say it will quickly) then the shift of the balance between buyers and sellers (plus the new profit takers from the last 2 days!) will dramatically shift. ---- this is a huge point here folks - the shift between the balance of buyers and sellers in the coming days.- look at fridays volume #'s !
The potential to give back a substantial amount of these gains, or even all of these gains is still strong.
Personally, I'm not convinced that the ''pattern'' of the Street selling into these non-fundamentally supported Earnings periods will not continue. We shall see next week as we are just starting the reporting period here.
The other pattern is even more important. The other pattern is the now 5th , or 6th run (Sept, Oct, Nov, Jan's tax loss re-buying bounce, March, and now) in which we have traded in a range of OSX 45-50ish on the bottom and hit resistance at 70-72ish on the top.
Here the great debate between buying and holding, versus trading the range becomes a moot point imho ! Unless you bought at the exact bottom on one of these cycles, you have NOT made any money unless you have taken profits (sold). - period. - untill today (on paper)... How many people have now ridden this Bronco 5, or now 6 times only to see their entire gains (profits) disappear time and time again ? - this is my entire point ! - unless you take some profits by selling into strength near the tops of these ranges - you have continually ended up with - zip/nada.
Imho, untill the Street proves to us in an unequivocal fashion (which I acknowledge they may just be doing here VBG) I still say - take profits and rotate.
A key strategy of late has been the ability to continually ''Rotate'' into laggards or alternative subsectors and catch an equal wave of return. I acknowledge that the list here is getting shorter by the day, but untill it no longer exists - this is ''the'' play in my opinion. The safety and beauty of this strategy is even if I sell RIG at $30 and can't buy it cheaper - missing a retracement call (which may have just done) I still win ! - I rotate into plays like PZE of late, the XTO's, small cap E&P's, the blowoffs in HMAR, laggards like TMAR, HLX etc. and get equal, if not superior returns. Untill either the Street proves to me that they are willing to move the range up to a new trading range level, I will continue to take a ''show me'' attitude to the OSX and will play the sell them into strength in the high 60's-70's tops and rebuy them on the retracements - or rotate into laggards play.
I sincerely hope, that the Street does move us up to a new range; which in my opinion will be approx OSX 65- 85ish. The question is not ''if'' they will move the OSX into this range - it is ''when.''
The ''when'' bet is the entire game here. I think that off of all the inital CEO comments about how the recovery is acknowledged, but has definitely been moved back at least 1, or 2 quarters - negates the ''probability'', but not the possibility, of the Street moving the OSX up into that range right here - right now.
I guess, having been wrong, been beaten, bloodied and battled last year has taught me some very good lessons. Lesson #1 - never, never, never fail to take profits on 20-30-50% moves; NEVER !
Take chips off the table - they are just ''paper'' profits unless you actually take some off the table and put them in your pocket !
Again, it is unquestionably a ''when'' and not an ''if'' question of the OSX moving to a higher trading range. When one looks at crude prices - one has to be euphoric ! While the fundamental building block of any recovery here is the ''price of Oil -stuipid'' - Not taking profits off of these ranges remains a mistake imho. For those who instead point to and celebrate all the good potential (keyword ''potential'') drivers such as higher Oil prices, good Asian demand news, probable OPEC cuts etc.are merely setting them selves up for the downside of our ''patterns'' of late...
Do not forget - that untill we see the actual results of these ''drivers'' such as increased rig counts/utilization, higher dayrates, new equipment orders, new service contracts and especially higher earnings - it remains a weak underlying fundamental market for the OSX. This is beyond discussion.
Sure, the forward expectations and near assurance of eventual recovery of the Oilpatch leads to the appreciation of stockprices here. However, the Street, Analysts and Traders have all been on record here of late in both their comments and their actions; of limiting where they would price these stocks and in what timeframe they would work with in relationship to the actual fundamentals changing. - this concept is of paramount importance !
We either are the fortunate recipient of a windfall of higher and less time sensitive expectations & sentiment from the Market, or we are poised to be taught another lesson.
Personally, taking some profits here is the only smart play, rotation as well... remember, every single buy & holder for the last 8 months has seen virtually their entire gains wiped out via cyclical trading ranges 5 times in 8 months. Temper that against all of those who just jumped on the mo-mo train the last couple of days.
People, what degree of profit taking on the last 2 days action is probable, especially looking at fridays volume ? - I do NOT remember when we ever had a 2 day 20%ish type move and not been met with a wall of selling/profit taking and a heavy move by the short sellers - accelerating the retracement off of normal profit taking. I remain unconvinced that we will not see the ''pattern'' once again....
''Pattterns'' - yes, I too love patterns Mr. Cramer - thanks for driving home another great point JC...I guess I'll have to renew my damn subscription even though I got ''no soup''...(VBG).
comments ? - this weekend will have more brain power turning and more analysis and more phone calls being made than anytime in recent OSX history. This will not be a boring week... |
