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

To: Stephen L. Smith who wrote (38116)	2/24/1999 11:30:00 AM
From: SliderOnTheBlack	Respond to of 95453

Stephen S; ie: SESI - & anyone just hear Insana/CNBC commodities ? First; I don't follow SESI that closely. TSC did hit on a basic fundamental of SESI's earnings upside potential due to all the shut ins etc... Without question SESI is a good value play. One can not forget that old line PKD chose to buy them etc... However; as a casual observation - given the Street.Com profile; I would wait for a dip perhaps here... let the rush to buy subside imho. Lots of small/micro caps that are tremendous value plays here - SESI TCMS OMNI etc. I prefer the low debt companies with the strongest niche's into deepwater and with the strongest earnings performance/projections and best balance sheets. IMHO; GIFI & UFAB are the clear leaders here ! I am keeping my eye on OMNI & TCMS and even HMAR - but my idea is to add these companies with my ''bounce'' profits as we trend upward again. I think these small/micro-caps will lag the leaders; and hence give an opportunity to wait utill we get more of a solid, entenched recovery here than do the leaders and Mo-Mo fav's ... *** Ron Insana on CNBC just brought up once again another ''trend'' indicator... Mentioned that many were ''reading between the lines'' Greenspans comments on NOT to expect Oil prices to continue to continue a downward trend ... Also; spoke to a good indicator being that watching the curriencies of Commodity Exporting Countries like Canada, Australia etc. were good early indicators of looming inflation/commodity recovery . In that the curriencies generally reflect surging commodity prices prior to the commodity price realization itself... Both curriencies are starting to show such movement... Folks; we are entering the ''Sweet Spot - Pocket'' of opportunity here ! The risk vs. reward scenario is getting awfully good. Both Bullish & Bearish technical and fundamental indicators are beginning to point toward a rise in commodities. Alan Greenspan called this recent commodity downturn a quote-unquote - ''phenomena'' and warned - yes he ''warned'' - NOT to expect this trend to continue... Given the hand of the Fed and the Global reflation underway; given the clock ticking every day closer & closer to an Asian recovery - and on that note; does anyone think that when we start to see some positive reports on Asian/Japanese recovery surprises that we will see a slow, steady inching toward a reaction ? On the contrary - the expectations will fuel a substantial reaction imho.... While it is '' the price of Oil - stupid'' that rules the Oilpatch; It is ''the forward looking expectation of Oil Prices-Stupid'' that determine todays stockprices... With historic cycles aside, with the 30 Million BOE drawdown by OPEC - which is 5 Million BOE per month by the way; how long at current levels of OPEC compliance untill we reach the magic sub 320 M boe that the street says is the ''Bingo'' number ? How long untill we reach 300M boe - which supports $20+ Oil ? People; OPEC does NOT need to impose new cuts for us to be successfull here; they need to only maintain 50% compliance to year end for us to be where we need to be ! If, however OPEC institutes new cuts - ''To the Moon Alice'' ! It's the ''TREND'' that needs to be watched. While OPEC is the primary driver/catalyst to a tremendous upside here; we are clearly, steadfastly approaching a level of supply/demand balance that will return Oil to historic norms. The upside that exists in the Market not factoring in where all of the International Oil Majors Cap Ex cuts will take us is an even bigger driver/catalyst imho than the probabilty of new OPEC cuts... This ''unfactored'' and admittedly smaller than OPEC factor is most importantly - ''unfactored'' into current valuation models to the upside; it was strongly factored into the downside - as when these Cap Ex budget cuts were announced these stockprices were hammered... The converse, of the effect of not being able to immediately react to ''any''' upside surprises in demand has NOT been factored. - Imho; this is another ''free chip'' on the buyside when weighing a decision to buy, or not to buy here... All of these little edges are piling up for the little guy here; and once again - I see us entering the absolute ''Sweet Spot- Pocket'' of the risk vs. reward model here.... To wait for OPEC cuts is to wait for a ''sure thing'' - obviously any surprise there will allready be priced into these shares,,, Curious as to what people think here - will we get a move upward/rally into the OPEC meeeting ? If we do - what does it mean ? Is it good news if we do ? - does it mean that the Street expects/knows OPEC will pledge better compliance/new cuts ? Is it merely them hedging their bets - wanting to be there if it does happen ? Will they blow off the sector if OPEC doesn't announce new cuts ? If the Street doesn't rally into the OPEC meeting - does this confirm that they have NOT priced any expectations into the OPEC meeting ? What is the right play/bet here ? I say the only way to play this; is if you want to be in upon New OPEC cuts, or a Street Rally into the Meeting; then you need to be buying dips here and perhaps taking some profits into a rally if we get one; and setting tight stops into the meeting if no new cuts, or stronger compliance is not pledged... To try to jump on the bandwagon and the inevitable profit taking & head fake rallies and other imaginary Naybob Nightmares only sets one up for chasing the Street and reacting to it; not planning and taking advantage of ''it's'' reaction to your plan.... Time will tell... PS Greenspan just spoke directly to monetary policy and commodities. He said we do NOT have the capacity to manage different regions inherent individual sector concerns. ie: Oil producing states... used California as an Agricultural example... and Steel producing States as well. All in all - he has spoken more to commodities recovering and warning of such than in ANY recent comments of late ! The message is CRYSTAL CLEAR - imho ! Anyone kind of think that he just might realize that all of the reflation/liquidity stimulus Globally just might raise commodity prices ? - duhhhhh... again; it is NOT that the Street doesn't get it - it's that they are not willing to sit for 1 minute in a ''deadmoney'' zone ! This Mo-Mo Mania- Market Anomaly has created a tremendous opportunity for contrarian value investing and will ultimately go down in history as one of the Financial Worlds great lessons... You gotta believe... and you have to be able to ''pull the trigger''