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Bob,
Thanks for your input. You may be right on the producers, but none of
them have turned up on my prosearches for a long time. Of course, I'm
looking for trending stocks and maybe the producers aren't there yet.
You're absolutely right that the danger of parabolic trending groups is that
they are institutionally driven and this can be dangerous if they all try to
bail at once. That's why it's essential to set stops under the trend
channel and bail when they are hit. That usually gets you out ahead of the
institutions, but the danger is there.
A more conservative investor shouldn't be looking for strong trending
groups. They should be looking for undervalued stocks and then using a buy
and hold strategy. I've been called a lot of things, but never a
conservative investor <G>. I consider myself a mid term trader and have
found that jumping on strong trending stocks near the bottom of their
channels has been quite profitable. Especially, if there is a good story as
a kicker and you always set, AND USE, protective stops. In this case, the
story is potential big earnings increase due to RDC having a strangle hold
on deep water drilling.
Even with this, I'm still cautious because of the potential for an
overall down market. This morning could be a blow off or the start of a
down turn. I'm going to wait until I get a better read before I do
anything.
Jim
-----Original Message-----
From: Robert Doeden <bdoeden@xxxxxxxxxxxx>
To: metastock-list@xxxxxxxxxxxxx <metastock-list@xxxxxxxxxxxxx>
Date: Sunday, October 26, 1997 7:50 PM
Subject: Re: Weekly Stock Watch
>The daily OBTR on RDC has turned negative. The weekly is still OK. Can't
argue
>too much against your pick but anyone considering this should realize the
group
>is in a parabolic uptrend. Fidelity Select Funds Energy Service Fund has
gone
>up about 6 fold since 1995 and everyone is loaded with these stocks. This
is
>not low risk investing. I'm wondering if the more conservative investor
>shouldn't consider the producers now rather that the drillers. The PE on
the
>producers is probably half that of the drillers. After all, if the
producers
>don't make money they aren't going to spend a lot of money with the
drillers. I
>just hate to be buying what the funds are loaded with.
>
>Bob Doeden
>============================================================
>Jim Greening wrote:
>
>> looking for strong industry groups, I finally decided on the oil drilling
>> group which has done good for quite a while and shows no sign of slowing
>> down. I then looked at some analyst stories and liked what I saw about
>> Rowan Companies (RDC). While RDC is in both offshore and land drilling
as
>> well as heavy equipment manufacturing and transportation, the real story
is
>> deep water drilling. The rates for deep water drilling are exploding and
>> RDC has most of the new capacity coming on line in the next few years.
>> Their earnings are already turning up with last quarters earnings being
over
>> 50% of the previous quarters and over double the quarterly earnings a
year
>> ago. With a lock on deep water drilling, the earnings should accelerate
>> even more from here. RDC at 39.312 is slightly below mid channel of an
>> Intermediate Term Up Trend Channel (ITUTC) with the top at 45 and the
bottom
>> at 35 1/2. There was a MetaStock RSquared, S/C,MFI system test buy
signal
>> in late May and the stock has been moving up strongly ever since with
only
>> one sideways move to the bottom of the channel in July and August
followed
>> by another strong up move in September and August. In October, RDC did
move
>> down and sideways to its current mid channel position. RSquared and S/C
>> indicate a strong trend in progress, but the money flow did drop in
August
>> and September and has leveled off in October. The fundamentals are
>> excellent except for PSR which is at 5.06 and higher than I would like.
>> However, this is offset by the potential for large earnings gains. The
>> Debt/Equity is 0.48, there is over 30% insider ownership, and revenues
have
>> been growing at over 20% per year. In a perfect world, I'd like further
>> movement towards the bottom of the channel before entering. However,
I'll
>> also enter if it breaks out and the market looks like it is resuming its
>> upward move. I'll keep the email list posted.
>> I'll send a RDC.GIF chart to everyone on the email list. If you
aren't
>> on the list and want on, just yell. The only obligation is participation
in
>> this email forum.
>>
>> Jim
>
>
>
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