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

To: Post_Patrol who wrote (89694)	4/4/2001 4:19:06 PM
From: SliderOnTheBlack	Read Replies (2) \| Respond to of 95453

SI THREAD SENTIMENT - METER ALERT ~ ... the arrival of the space balls & angry chihuahua's who made it thru all that traffic to crawl back "over here" - under our fence; to try to get in a last few ankle bites - tell's me we may be ready for a nice little Oilpatch Rally. We clearly had the SI Oilpatch Thread Sentiment Meter read - capitulation yesterday and I put some cash to work; as the SI Thread Sentiment Meter has not been wrong on buy, or sell indicators in 18 mos & I'm being stone cold serious about that... I bought a nice load of calls yesterday & a little common in mainly drillers - RIG PDE ATW , got some MVK & CAM for service exposure - nothing of the "Mad Max Margin" level; but I'm 25% back in oils with about half of that being out of the money calls that are very levered should we pop back thru OSX 125ish & should we see OSX 150-165 will have tremendous % upside returns. I think the "soft landing" economic scenario is looking better each day and the OSX may have just hit a late cycle shakeout botttom & be poised for it's April-May Rally which I think we are about to embark upon; unless a rapid collapse in the core US economy is coming around the corner. This BEAR market is in MY opinion; only 25% related to the slowing US/Global economies and is 75% related to the core problem in this market - valuation multiple excesses in Tech & a Cap Ex Spending anomaly created by a one time equity & bond market capital/credit bubble that no longer exists. The Oilpatch cycle expansion limitations & valuation caps are conversely 75% related to the slowing US/Global economies & only 25% related to valuation multiples of late. While PE's of 75-80 were still rampant in Oilpatch land on a trailing basis; there are forward multiples of less than 7 x 2002 eps estimates in stocks like PDE - in which if the 2002 #'s are accurate and I think they are - offer tremendous risk vs reward opps. RIG at $40 is not the same risk vs reward profile as RIG at $60. CAM at $48 is not the same risk vs reward profile as CAM at $60, or $72... OSX 104 is very, very tradeable - OSX 135 heading right into the Q1 tech earnings reporting & revisions was NOT. We've just had a valuation multiple contraction in tech that took even the strongest & biggest of names down & down hard and simultaneously offered a 30 point discount in the OSX... I like that bet & took it. The downside risk in this Oilpatch cycle however; is that if storage numbers break over 300M boe in an uptrend in conjunction with a still slowing US economy - then the Street will completely disconnect shareprices from the fundamentals of 2002 eps estimates and/or commodity prices at any time & it is NOT a "10 Ft Tall & Bulletproof" ennvironment untill Tech turns the corner fundamentally, untill liquidity in the market is reflected by $300+ gold, untill the Fed is ahead of the curve & not behind it and not untill consumer sentimet & spending make a nice upward break. The upside to this market is that if we pull out of an economic soft landing in the US and if OPEC manages to keep Crude in the band of $25-$30 - then the OSX can go to new highs - even into the still contracting valuations in techland and the broad market; as I think the bulk of the damage to both investor sentiment & tech shareprices has allready occured. I think we've got one last violent leg down for tech - either off this Q1 reporting in the coming weeks; or from Q2 reporting - as the 2H recovery story in tech is still keeping a base of money in tech; but once the tech recovery story is either moved out to mid 2002, or a realization comes home to roost - that there is STILL absolutely no visibility of WHEN, OR IF the recovery will occur; then we face a true Capitulation Storm environment - where people do not want tech at any price; at any valuation - they just want out... if we reach that "we just WANT OUT" phase of the Bear Market - then the Oils get pulled under along with everything else and once again; it will be profit taking & exit time in the Oils - regardless of how "10 Ft Tall & Bulletproof" commodity prices, earnings, or frontline activity is... maybe the chihuahua's will learn from this recent shakeout - but, I doubt it. Tech may take the Oils down once again come the 2nd half - few will probably connect the two again if so; but we have a nice WINDOW OF OPPORTUNTITY between Q1 & Q2 tech reporting for the Oilpatch to rally strong & I'm playing that trade -but, with one eye eternally glued to the exit door at all times. I think the sweetspot for another Oilaptch rally here is April to August for another reason besides the window between Q1 & Q2 tech earnings reporting... that reason is the very strong seasonal patterns that endorse that April to Aug Oilpatch rally as well... But; the August sellers (us) will be dumping into those chihuahua's (them) who will be looking to Winter & anothr Nat Gas Crisis - not relaizing that that Winter Crisis is "correctly" sold in August/Sept - NOT in the middle of, of post Winter (VBG). For now; the still strong US Employment & surprising auto & retail spending is keeping the "soft landing" scenario afloat & Oils stand poised for a strong rally from here & potenetially even to new highs for the late cycle subsectors - primarially the offshore drillers & service co's. I'm back in for a "call" levered play in the offshore sector - especially the deepwater drillers with RIG & PDE being the most upside levered imo. - I'm still keeping 20-25% cash & my 50% gold/silver portfolio weighting as I think the liquidity that this market & economy demand is going to take Gold back to $325 just as Steve Forbes , Larry Kudlow & the "Powers that be" - are calling for... Imho; were now entering another "Hat Trick" trading opportuntity; 1. Long Black Gold 2. Long Yellow Gold & SILVER 3. - wait for the final capitulation in Tech that is stil coming - to finally deploy the last wave of cash. #1. gives us OSX 104 to 165ish potentially #2. gives us XAU 40 to 85ish+ potential (@ $300+ gold) #3. should eventually give us a NAZ 1365 entry opp (sub 1500) to a NAZ 2100ish resistance trade in due time - for those that are patient. Still another 20% in the NAZ and that's 30-40% lower in many indiviudal stocks... I would not mind waiting to pick up CIEN at a sub 30 PE for example (VBG). Nice action in the Golds - Gold pushed under $260 and the stocks refused to budge... technically XAU 45 held well and the unhedged golds are holding very strong & have VERY strong OBV/Money Flows. I think the OSX & the HUI/XAU are both ready to rally here shortly. We shall see... PS - stocks like PMCS - a top tier tech fav' - now selling for 1/13th of it's 52 week high... one thirteenth !!! Think Kevin Landis at First Hand funds has some hedge fund shorts leaning on him with both barrels or what ? Single digit Cisco ? INTC in the "teens" - whodathunkit ?