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

To: Broken_Clock who wrote (14929)	3/16/1998 6:38:00 PM
From: Lucretius	Respond to of 95453

Run for the Hills!!!!!!!!!!!!!!!!! HEHEHEHEH, just kidding. <<<<I'm not sure if Luc was looking at this bearish of a scenario...Well, LT? What say you? We know these puppies gotta go back up sometime. >>> I believe it is times like these that are buying opportunites. You've got to remember, when you're basing along at support, every test of that support seems like the end. Likewise, every test of the upper resistance in the trading range seems like the turnaround or "this is it!" Knowing when it is for real either way is the trick to trading this sector that I cannot do. I am not a trader. I have given you my scenario for a turnaround in this sector. That's why I remain long throughout this whether this thread is euphoric or depressed. I think we will continue bouncing in this trading range w/ the highs being established recently, and the lows being established back in Jan until either the bulls throw in the towel that oil will stay at $12 AND it will stay there throughout '98 AND E&P co's will cut upstream spending, or the bears throw in the towel that oil isn't going to stay this low (the more likely of scenarios). NE, for instance for no other reason than me being intimate w/ its fundi's, has K'd out 75% of its '98 revenues already. That was reported back in Jan. I'm sure others are in the same position. So, NE has very little downside in actual earnings slowing if oil were to stay low for the remainder of the yr and ramp up beginning next yr. The mkt is extremely overvalued at this point and will pull back very soon (IMHO) Oil services will get hit just like the rest but not as bad, and we will be the first to recover. I still anticipate these stocks going sideways till May (maybe early June) w/ perhaps a final plunge in May retesting the lows of Jan for those that have established a trading range above those lows, such as NE, and others ,like FLC, that haven't hitting new lows before the eventual climb, much as things occurred last yr. Oil won't stay here. My only support for that is the financial pain that it inflicts on producers. Look at a chart of crude. Over the past 15 yrs we don't stay here very long. SOMETHING happens. Whether OPEC cuts back. Demand in Asia and he US picks back up to normal. Notice that I said "NORMAL" Demand for oil in gas is growing. Demand will soak up the extra supply given time in the owrst case scenario. Best case, there is an event such as OPEC cutting production, war (don't forget the idiot over in the desert), King Fad dies sending Saudi into civil war, OPEC members attack Venezuela militarily (very much a long shot), etc. My only point in listing these events is not to predict the future, but to say that when crude reaches these levels, SOMETHING always happens to support it. SIDENOTE: (I've got CNBC on right now. I noticed these idiots showed the worst two charts they could find, SLB and FLC. HEHEHE I'm going to laugh in a few months) So, to make a long story short. I'd be a buyer in here, and would continue to add to my position as these drillers dip and look to be going into the trash can over the next few months. Good luck! (and keep an eye on the XAL, prepared for the short of the century!! When oil does begin to turnaround. Those airline investors are going to get their heads handed to them. It is just the excuse needed for investors to sell that sector into the ground. Check out some of the airline threads around here. TWA, AWA, etc. Those guys think they're invincible..... people speculating on airlines recieving P/E's of 20x when the historical average is less than 10. Like a lion sizing up his prey w/in the herd. Do your research and pick out the weakest in the herd so when the time comes, you can grab it by the thoat and take it to the ground. I've already done mine, and am watching the herd from the woods, licking my chops. :) -Lucretius