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Hi Jim,
<P>You do know that oil price jumped 40 cents a barrell. That is why RDC
is up. If oil moves up then RDC moves up. If you don't know where oil is
headed then your taking a chance. As far as the over all market I would
say theere is a greater chance for the market to go down than up. Why?
Global economy not looking to good.
<P>I haven't seen the Excite chart but be wise with your puts.
<P>Harley
<BR>Jim Greening wrote:
<BLOCKQUOTE TYPE=CITE> <FONT COLOR="#000000"><FONT SIZE=-1>All,</FONT></FONT><FONT COLOR="#000000"><FONT SIZE=-1>
We got the drop that I was expecting this week, but now I'm confused.
Are we in the process of completing a typical four month bull market 20%
correction or is this the start of a bear market? I was definitely
bearish last week as all the indices were breaking intermediate and long
term up trends which confirmed a down trend was in process. That's
still the same this week, but I'm getting mixed signals. The NASD
OTC bounced off the bottom of a 4 year long up trend channel this week
and looks like it might be establishing a bottoming pattern. The
SPX and OEX both bounced off the bottom of 2 year up trend channels and
also look like they are bottoming. The DJIA looks like it's trying
to bottom, but I don't really see any support until just under the 7200
level. The Russel Index is in free fall with no bottom is sight.
This could be typical of a bottoming pattern where the large caps lead
the way up again or it could be a bear trap. The fact that DELL,
WLA and some of the other market leaders haven't broken through the bottom
of their intermediate term up trend channels but look like they are bouncing
off the bottom supports the correction theory. The internet stocks
patterns would support the bear market theory. Since I'm uncertain,
my options at this point are to either do nothing or since I'm all cash
except for my WCOM put options, I could nibble in both directions.
Nibbling is more fun and I have the large cash position for a cushion,
so that's what I'm going to do <G>.</FONT></FONT><FONT SIZE=-1>
For my long pick I'm going to be a little defensive and pick the oil group
and more specifically the oil services group which look like they are breaking
out of a year long down trend. My pick here is Rowan Companies (RDC)
the deep water driller that I had a position in last year. The story
then is that Rowan was in the deep water drilling niche where demand was
increasing, day rates were increasing, and they were the only one
with new rigs coming on line in the near future. That's still true
although FLC is providing more competition. Earnings held up as expected,
but RDC dropped with the rest of the oil group anyway and now has truly
outstanding fundamentals. For my short pick I'm going with Excite
(XCIT) which was one of my finalists last week. The story here is
an internet, no earnings stock, that should get crucified in a bear market.</FONT><FONT SIZE=-1>
RDC at 12 3/8 broke out of a Short Term Down Trend Channel (STDTC) Thursday
and continued its up move Friday. It peaked at 43.9375 nearly a year
ago on 11/06/97. From there it fell to a low of 9.0625 on 8/31/98.
It then rose to its current position. Tema Binary Wave and QStick
are both negative, but rising from a negative peak. The fundamentals
are great with a PE of 5.30, price/sales of 1.29, debt/equity of 0.34,
return on equity of 26.5%, 25% sales growth, and 80% income growth.
I'll open a long position Tuesday. I'll set my target just under
last years high at 43. Since there isn't enough data yet for a good
Short Term Up Trend Channel and since I'm bottom fishing here, I'll set
my stop under the 8/31/98 low at 8 3/4.</FONT><FONT SIZE=-1>
XCIT at 25 7/8 broke through the bottom of it's Long Term Up Trend Channel
(LTUTC) Monday on large volume. It peaked at 55 1/2 on 7/7/98 and
then fell until it broke through the bottom of its LTUTC Monday.
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