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

To: diana g who wrote (43029)	4/22/1999 10:53:00 PM
From: SliderOnTheBlack	Read Replies (4) \| Respond to of 95453

diana g; you above all - ''nailed reality'' in your posts today... But, are we living in ''reality'' here ? Does ''reality'' even matter any more !?! Your posts today from RIG & NE's CEO's should drive home the reality in the Oilpatch . This is not an alarm of gloom & doom; far from it - we need to realize that there has to be a disconnect from just the euphoria of crude prices here. We have had a great run here - and our history in the Oilpatch dictates that when we come this far, this fast - a substantial retracement is inevitable. The odds seem good that the Street will ultimately reach a point risk vs. rewardwise here - where the forward looking expectations of the eventual recovery (when not if) of the Oilpatch to a business as usual enviroment; are tempered by present shareprice valuations and the cold stark reality of the actual fundamentals of rig utilization, dayrates, equipment orders, backlogs and most of all earnings . To best determine the future - look merely to the past. When has the OSX ever rallied this far this fast ? - answer, it never has. We saw the greatest percentage gains in the shortest period of time in 30 years as noted by Bloomberg and other articles. Also, has the OSX in the last 3 years, ever had a 50% move and not retraced nearly 25% at least ? Talk about the EW's being on the money ... We rallied strongly in 1997 to what ? - OSX 140, retraced that fall & winter to OSX 100 - a 40% retracement, we had volatile cycles in Jan & March of 1998 culminating in the March to May run resulting in a crash from OSX 118 to OSX 45 in September of this year. From September through the present, we've had 4 runs of OSX 45 to 72ish and have given up nearly all the gains each time. While the Price of Oil has virtually guaranteed that we will not give up all of our gains here; the eventual strong retracement is just like the eventual full recovery - a ''when'' and not an ''if'' question... We've now had a pattern of CEO's from PGO, VTS, ESV, RDC, RIG, GLM, and now NE's Day saying that perhaps the ''bottom'' is not quite in yet - and that recovery is perhaps further out than most initially expected. Yet we keep holding strong here. Perhaps we move on through OSX 85ish here, but does anyone really think that given the disconnect between actual fundamentals and crude prices - tempered by the past 3 years of sector history; that it is not merely a ''when'' and not an ''if' question on a major retracement ? That is the $64 question... personally, the hedged bet is still to take profits on each new leg upward here (at least partial positions) and rotate into either laggards, or in my opinion the actual subsector that benefits to the greatest degree by the rebound in Oil prices - the Independant E&P companies. I will continue to do this untill I see the actual fundamentals in the OSX change. We need rig utilization, dayrates and orders to increase before I feel comfortable in just holding and letting it ride... However, I also will not take the bet that we retrace substantially here to a degree of not being invested in the overall sector. The bet for an OSX retracement is good - but it is far from a sure thing... and after all - what ''bet'' is a sure thing ? Being ''invested'' somewhere in this sector to a major degree is very important. As we are still performing admirably as of today - maybe we move on through OSX 85ish here ? - if so; I will take another round of profits and still keep the money at work via rotation into laggards, or still undervalued E&P's. Does anyone think that we just ramp on through OSX 100, OSX 120 - all the way from OSX 45 ? All without any major retracement given the present state of the actual fundamentals and the warnings by the CEO's here that the timeframe of recovery has been pushed back expectationswise ? If we do - it will be a historic run... Given the history of the OSX over the last 3 years - that is not a very good bet...imho. All in all; I'd say in BigDog vernacular - that the ''yellow cautionary flag'' has to be out here... however - given our performance of late - it is still paying big to keep the money working... as such - I still say take profits on each new leg and rotate ! One can hardly afford to not be ''in'' in this enviroment, especially with so many alternatives. Time will tell ...I just have to think that there will be a vacumn, or a deadzone of good news to keep us moving here. The only exception may be that we hold steady here for another 3-4 weeks somehow and that we get a lift from the expected solid initial compliance by OPEC on their new cuts. If Crude prices get an additional ''pop'' from that news and if the overall market is soft - maybe we continue to ramp upward with another rotation of fresh money !? It will not be a boring ride ...