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

To: Redman who wrote (5263)	12/15/1997 9:18:00 PM
From: Thean	Read Replies (6) \| Respond to of 95453

We started off the week with one foot in the mud. The technical picture right now is downright ugly. We have 90% of all drillers closed lower than the previous lows on Dec 1, taking out that suport in no time at all after open this morning. Below is my estimate of of where the lower Bollinger band lies TOMORROW in brackets. I split them into three camps: Camp A - those closed below the lower BB today. MDCO (19) DO (43) GLM (24) RDC (30.5) NBR (32) PDE (23) PKD (11.75) EVI (41.5) ESV (32) KEG (20.5) SDC (37) VRC (20) Camp B - those closed at or near the lower BB today. FLC (30) UTI (25) RIG (43.5) NE (28) CDG (49.5) RON (55.5) FGII (28.5) Camp C - those closed above the lower BB today. PDS (22.5) BDI (16.25) GW (5.75) PTEN (33.5) MAVK (25.5) MIND (16.5) Camp A's selling today was overdone. It is highly unusual for a stock to have two consecutive closes below its lower BB with no company specific negative news. Therefore from TA standpoint they odd for losing more ground percentage-wise should be no worse than its peers in general. Looking at intraday charts, there was no strength in staging a rally in the afternoon, and this is another negative. It looks like selling may continue. Rigth now I would use the lower BB as a day-to-day support point since the "long" stochastics (the one I'm comfortable with) will need at least 2-4 days to go to a clear oversold. Anyone who has checked the "short" stochastics may want to add here. I don't have access to Second Opinion. We may be catching the lower wave and ddrift to lower lows for 2-4 days. On a positive side, maybe something will happen tomorrow and the drillers all rally. The depth (strong volume) of today's downturn is as mystifying to me as to many. The e&p budgets announced by the majors (Chevron, Texaco, Shell) so far are BAD news. I think the market has factored in a higher year-over-year increase in e&p budget so this can be a shift in fundamentals. We will see how other majors like Exxon and Mobil do. Won't be surprised if they join in the party and announce no e&p budget increase. Let me ask the industry folks like yourself (Red or Green), do you think the drillers can continue to charge higher dayrate in the face of the "new" stance by the majors? I don't know if a parallel can be drawn here, but the component suppliers in techs (e.g. diskdrive business) are asked to sell component at lower prices to the maker if the maker's margin is under pressure. This is an open question and I have no answer. For those sitting on a loss, my advise is to sit tight till a rally comes. The relief is but two weeks away, IMO. There WILL be a rally before the earning season hits. Fund will want to buy when this slaughter is done as long as dayrate will not contract going into 98 (an unlikely scenario). The PE will hold up, they will only go to single digits if the dayrate is contracting. When so many fund managers say they will only want to buy after Dec is over, I think they are making a self-fulfilling prophesy up and the rally will be strong and irrational. We will worry about that when the time comes. For those sitting with cash thinking about buying in, I would not buy at the open tomorrow for sure. If prices stabilize and a bounce back is sustainable through to close, get in then. Comparing this downturn to the one in Jan-Feb this year, this one is worse in depth. As to duration, we are at least 7 weeks since the peak and 10 (calender and not trading) weeks of hell is my absolute maximum. Good luck everyone.