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

To: Big Dog who wrote (6774)	1/6/1998 7:22:00 PM
From: John Carpenter	Respond to of 95453

I believe that the sellers believe that crude oil demand from some Asian nations will soften because oil is priced in dollars and many of the Asian nation's currencies have been seriously devalued. They further suggest that a slowdown in Korean, Malaysian, Japanese growth will pressage a slowdown in U.S. growth. Some of the sellers worry about OPEC oversupply coupled with Iraqi market reentry. Other traders fret about El-Nino, the abnormally warm winter. Some worry about an eventual U.S. recession. Sellers are probably afraid-their fear clouds rational judgment. I've done my checking-the demand for rigs(particularly deep-water/harsh enviornment) is robust. The integrated/oil companies will need to replace 75% of reserves by 2010. The supply of rigs is severely limited partially due to the severity of the last downturn. You've already commented on how hard it is to get a good rig right now(and how long the wait). Oil executives are smart and thinking ahead.

To: Big Dog who wrote (6774)	1/6/1998 7:47:00 PM
From: Thean	Read Replies (1) \| Respond to of 95453

There is actually a very simple reason why the drillers perform the way they do. We have momentum players shorting the drillers, the exact opposite of what occured in Aug-Oct of 1997. Not convinced? Two simple facts: 1) Print out a six months price chart on any driller on Transparency. Then flip it upside down. Then turn it over. I bet you can't recognize whether we have a bull run or a bear scare. The price movement pattern is exactly the opposite, which means traders are shorting the hell out of the drillers just like they drove up the stocks as if the demand is endless. This is momentum trading 101 with a reverse twist. Believe it because it has happened for the last two months. 2) Why did GW not getting hammered today as bad as its land cousins? Clue: IT IS BELOW FIVE BUCKS AND CAN'T BE SHORTED. DAH! Nancy, have it occured to me that all my TA work did not reveal this obvious trend? Dah, NO. Even a turkey can see the price movement pattern. What is surprising is the magnitude and duration of this downtrend. The crude prices downfall hit at the worst possible time. If we don't have the crude as an excuse, the downtrend would have ended by end of Dec. Remember, we are talking about momentum traders driving things around. They always drive things to extreme. To profit in this environment one has to be a trader and not a long term holder. If everyone wants to short it, then we should go along. I don't try to pick a bottom, I try to see how I can profit. The reversal will be so powerful when it comes, helped very much by short covering. But meantimes, we are on the downtrend and we can't and should not fight the momentum. So what do we do? Like Mike says, have no fear. The wait maybe long but if one has a horizon of 1 year, you will see the Green light sometimes in 1998. Sell then. If you are a long term investor, the worst thing is to sell into this panic and decide to wipe your hands clean of all drillers. You need to participate when things turn around. One year is a long time for a turnaround. Nothing stays at a depressed level for an entire year with such great fundamentals.