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Gold/Mining/Energy : Strictly: Drilling and oil-field services -- Ignore unavailable to you. Want to Upgrade?

To: seminole who wrote (80473)	12/1/2000 11:38:00 AM
From: SliderOnTheBlack	Read Replies (1) \| Respond to of 95453

What fundamental, "OR" technical reasons for a bounce that holds, or a bottom ? We are due for a "stabilization" here - ESF/PPT must allways ensure that selloffs do not get out of control in a true Oct 1998 type of capitulation; of which we have yet to see anything near that type of capitulation - "yet". But; as far as thinking this is a safe investable bottom ? ...in Techland - earnings are STILL - UNQUESTIONABLY coming down. The market does NOT have a handle on where earnings are going to base in techland here - ie: Gateway's 40% overnight implosion.... As I said before; there is no bottom in site - NONE; as long as we have "name" companies imploding 30-40% overnight. That is not normal, that is not rational and it endorses the still "irrational exhuberant valuation excesses here - and this continual Gateway-esque type of overnight implosion of 40%+; is an absolute endorsement that this market does not have a handle on where earnings are going to "soft land" - nor, where "fair value" for these companies are in this environment - and that there is STILL a lot of "air" to be squeezed out of this balloon. Xmas retail season WILL be disappointing; margins are going to be decimated to boost revenue levels and to keep inventory in check. Another complete negative chain of market events is going to evolve from this disappointing Xmas retail season imho. Financials have significant credit quality issues from corporate bonds to consumer finance. Significant issues there - that led Greenspan to rush new Bank Failure reforms thru congress... that should be a heads up and remember; if there is a looming crisis in financials (and there is) the market follows financials... Additionally; what positive signs are out their within the Election Debacle that signal a safe, or bullish investment environment - especially for our foreign investors; on whose continued investment we need to hold the dike... ? At any given moment; a single Press Conference can immediately change market direction - that is NOT; a positive risk vs reward environment to make significant portfolio bets either long, or short imho. This is a time to only be partially exposed and to slowing average into new bottoms and to maintain conservative money mangagement - stops etc. Doug Cliquot of JP Morgan was on CNBC this am; he says this is in essence "nibble" territory; but expects the market does not bottom untill May, or June next year - of which I concur; as we will need that period of time to internalize the Xmas retail season, to see where a Winter and nearly a year of $30 Oil takes us inflation-wise and most importantly - that period will allow us to see just how "soft" the US Economy lands & that is a question that can not and will not be answered in the next 2-3-4 months. That "wait & see" window hopefully will allow one last Oilpatch rally leg - again; in what has now become a near traditional March to April/May rally. That may be the last ride on the Oilpatch Train - as a softening US Economy will NOT be an environment in which the Oil Majors will aggressively pursue the degree of Cap Ex spending necessary to sustain a significant multi-year Oilpatch expansion cycle. We had too much overbuilding from the 97-98 cycle; the only thing we need to do; is to maintain a higher bottom to the downcycle for Nat Gas drilling - which we will. But; this will not be an environment for the Nat Gas plays to establish new highs, let alone return to levels near their old highs. Perhaps some badly financially damaged small caps - who thru sustained $4.25+ Nat Gas can repair their damaged balance sheets and actually increase cap ex spending in 2001-2002 over 2000; will see new highs. Only significant production, or exploration growth success stories will see new highs in 2001 with a soft US economy. For the APA's, the APC's, the BR's, the EOG's; I am not so sure... The drillers & OS co's post the March-May rally next year; will have a higher "bottom-cycle" level of sustained drilling - especially for Nat Gas; but will they reach new highs ? - not with a soft US Economy and presently; all signs point to a too soft landing. What I think will be different in this cycle; is that the bottom will be more positive and will sustain higher levels of Nat Gas exploration & drilling levels - but; not enough to move anywhere back to new highs. That's my take... I see no compelling "risk vs. reward" reason to bottomfish here - other than for a daytrade, or 2-3 day short-term trades. I think the chances are very, very good we see the OSX 80's and we do a slow grind thru January-February to get there. - that's a lot more pain & from this 115-120 "dip" that many bought here; that's portfolio destruction - or, at the least; giving back nearly everything, everyone made over the past year - when monkey's throwing darts made 50%+ in the Oilpatch. The Oilpatch is, was and will allways be cyclical - due to to commodity price cycles. But; it will also perhaps even more importantly; be cyclical in money flows of investors within those cycles. The "true-believers" the energy investor die-hards here will continually buy those first 2-3 signficant dips off the crest of the peak of the cycle; as they look so enticing valuationwise - especially as they are falling into rising fundamentals and often record earnings reporting.... BUT ! - "THAT !" has been the pattern of the last few cycles - that we rapidly fall directly into near-record earnings reporting and incredibly attractive forward looking earnings estimates and/or commodity prices. Again; the Street is looking at both the Cap Ex and commodity price environment 15-18 mos out imho. A slowing Economy; either domestically, Asian, or European; is "death" to Oilpatch investors - and at best; will bring a very significant mid-cycle shakeout correction that will allways be a bit longer & a bit deeper than most die-hards expect. Again; look to the 97-98 cycle. We corrected over 5 months from OSX 140 before bottoming at OSX 80ish; then that pause that refreshed - did allow a 50% upside move; but it ended at OSX 120 - 20% below the former early cycle peak. The Oilpatch needs the casual, non-die hard, non-energy specialist investor to maintain upcycle trading legs and to reach new highs. The one characteristic of these non-energy specialist invevestors is that they will allways look first to the commodity price cycle as an initial exit point, they will allways leave early, they will allways protect significant profits, they will never be patient and their investment footprint & thier influence here; will allways be bigger than most expect - ie: their exit will lead to longer & deeper corrections than most anticipate. One last thought; many , many here have made a lot of money - vastly outperforming the overall market for the last 18-24 mos. Please; do NOT give it all back... I did in 1998 and it took the some blood, sweat & tears active trading and what turned out to be a fortunate, very volatile, but a not too dificult quadruple OSX bottom - rolling trading range of OSX 45-75ish in late 1998-1999 to get "well/even". I wish I would have listened to many of the warnings back then; I would have been much, much ahead of the game. But; here on SI-SD; the warnings were coming from the "casual" energy investors & not from the Die-Hard Energy Investors. But; this time the warnings ARE coming from the Die Hard Energy investors.... heed their warnings; they know of what they speak... Nothing wrong with being 30-50% invested and if this is "THE" bottom of the pause that refreshes - then making 30-50% on on a partially invested position is still a healthy portfolio gain. "That" versus being fully invested, let alone margin leveraged and either losing it all, or giving it all back - if this is not the bottom is the call... Good Luck; and again, the Big & Easy money has been made - as it is allways made in the early stages of the Oilpatch cycle - not at the mature exhaustion points. The risk vs reward meter is NOT positive, there are numerous external factors such as the election that can cap the OSX upside regardless of its internal fundamentals at any given time. If you were fortunate enough to have been heavily in cash here; sure - this may be a good point to nibble and average into on the way down and if this is indeed the pause that refreshes/bottom and it could well be. But,average in, be prudent - manage your money with stops etc. Personally; I will only "nibble" via more "calls" - keeping my exposure limited, my downside defined; but retaining some upside leverage to my limited exposure. I'm choosing to give up a full exposure/fully invested - bounce here; for the risk protection and the opportunity to pick up a true mid-cycle capitualation bottom in the OSX 80's where present commodity prices and the still not fully recognized too soft landing, will still support a decent early 2001 bounce rally. Good Luck...