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   PoliticsWelcome to Slider's Dugout


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To: SliderOnTheBlack who wrote (196)7/22/2005 3:03:50 PM
From: SliderOnTheBlack
   of 41500
 
~~~~~~ OSX: Partying like it's 1999 ~~~~~~~

Experience is a great teacher...but, only if you showed up for class, took notes, listened and learned the lessons taught.

One could have been 110% correct on the ultimate ending for the Internet,Tech & Telecom Nasdaq Bubble in 1999 - but, if you chose to step in front of the NAZ Train in the Fall of 1999 at around NAZ 3500 - the last thing you heard was that whistle and the last thing you saw was that white light...

So, if you think you know a 1999-esque Train-Wreck in the making when you see one; do you try to defy the odds and ignore risk:reward metrics and try to perfectly time the top before going short ?

- do you even attempt to trade it at all ?

- and if so, how do you trade it ?

Did we learn anything from the NAZ-Mania of 1999 that can be applied here to the Oilpatch Stocks ?

In my opinion, we did.

The lesson was this:

- NAZ 3500 ultimately offered 1,500+ Points in BOTH directions.

- both Bulls AND Bears ultimately got massacred by the NAZ Bubble in 1999.

So in retrospect, hopefully the lesson learned - was that "volatility" was the best risk:reward bet of all. Certainly better than either trying to call either an ultimate Top, or a Bottom.

As such, for those that attended Class, took notes and both listened and learned from "The Party of 1999" - The "best" Risk:Reward Trade is not in attempting to call either the ultimate Top, or the Bottom in the Peak Oil Play - but rather it is in making the Trade that in my opinion, is being offered to us once again on a deja-vu Silver Platter - VOLATILITY.

* VOLATILITY is the Play & OPTIONS are the Way *

Options allow us to lever Volatility, while simultaneously allowing us to quantify and limit both our exposure and our potential downside.

That would have been a very smart way to Trade the "Nasdaq Party of 1999" and I think it will be the smart way to trade the Peak Oil Party of 2005 as well.

I went short in March & April atop the parabolic move in Oil & Gas stocks from Jan to March:

Message 21121409

Message 21121783

I thought that if the Bush/Cheney Energy Plan was passed, that Oil could ultimately fall to as low as $38 on a pullback... it hit $46 - which was over a 20% retracement and some stocks like ATW & BRY paid me $12-$15 on the short-side and it ended up being a pretty well timed and nicely profitable swing-trade on the short-side.

When I covered my short - I bought some max out of the money Calls & LEAPS to institute a moving/dynamic Options Straddle - but admittedly, with an ultimate Short-Sided Trading bias.

Today, those "calls" are highly profitable and I am cashing in all of my "calls" bought on the short-cover...but, will still hold 'all' of my LEAP CALLS - in following the Market Lesson of 1999.

As far as re-instituting the Short side of the Straddle and buying some more Puts... patience.

Long fought resistance when ultimately penetrated, oft' becomes future support.

- give the OSX some line here... let 'em run. Earnings are strong and HAL is popping +9% on 3-4 x normal volume - so patience on the short-sided trigger finger is prudent here.

One does not have to be a believer in $60 Oil to profit from it on the long side any more than one had to be a beliver in NAZ 3500 in 1999.

The lesson hopefully learned was that irrational exhuberances and speculative momenteum can go much higher, for much longer - than anyone would rationally expect.

Being right and choosing to be right - via standing in front of a Freight Train... are two different things.

I think I am "right" on the Fundamentals of Oil here, but I learned my lessons from those that attempted Martyrdom from the NAZ-Bubble of 1999.

The beauty of being "right" on the "VOLATILITY" Trade, is that I do not have to be "right" on the ultimate veracity of the "Peak Oil is Here & Now" Trade... I only have to be right on the lessons learned from "1999" on what the best trade really was... "VOLATILITY".

PS: Only 200 more Rigs drilling this year than last... for Peak Oil-Mania to unfold as scripted by the Simmonsite's - there had better be one helluva depletion rate YEAR over YEAR and one helluva lot of dry holes being drilled (vbg).

Slider`

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To: SliderOnTheBlack who wrote (240)7/22/2005 5:14:40 PM
From: yoremonhoj
   of 41500
 
Hey slider what do you think of Buffets big buy in the RV industry yesterday?Caught me by supprise as I see little upside going forward.I am sure you know of Forest Rivers ties to the old Cobra and what happened after that company went public.Could old Warren have been taken?

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To: yoremonhoj who wrote (241)7/22/2005 9:31:21 PM
From: SliderOnTheBlack
   of 41500
 
Yoremonhoj' re: Buffett' and RV's......

Well, given that Berkshire Hathaway Stock has been flat for nearly - "forever"...(allthough it has outperformed the OSX over the last 5 years...(vbg):

finance.yahoo.com

It does speak in my opinion, to a very interesting and valid concept - sometimes referred to as "Drive by Jounrnalism", or "Drive-By Economics."

In that individuals as Journalists, Traders, Economists, or Fund Managers...tend to naturally "couch" National, or Global Markets in terms of the people they interact with on a daily basis, in terms of the specific local economies in which they live and work and that they are naturally influenced by the sentiment of those environs.

ie: Buffett & Berkshire Hathaway's value oriented approach from Omaha, Nebraska...and for example the very well grounded and conservative track records of Institutional, of Fund Managers located outside of the Beltway, Wall Street, or either the Left, or Right Coasts... such as the quality of Financial Managment found in Omaha, Ne, or Kansas City Mo, Minneapolis Mn, or Cleveland OH. etc...

Buffett & Berkshire Hathaway have done quite a bit of shopping in Indiana of late fwiw:

Ft. Wayne:
pamedsoc.org

Milford:
ctbinc.com

...and now, Forest River in Elkhart:
pamedsoc.org
< ...I wonder if Bobbie Higgin's Southfork will be put up for sale ?>

Imho, it speaks well for those Middle-America value's ...and Elkhart Indiana, in particular deserves a "Tip of the Hat" and a Salute... as a great example of a City that personifies the American Dream & Capitalism at it's finest; in that we would be hard pressed to find another Small-Town USA City in which so many, that started with so little... created so much out of nothing, in the middle of nowhere... but, sadly; Elkhart as many cities in what can now be accurately referred to as America's Industrial "Rust Belt"...has not prospered as a City, equal to the rise of the RV Industry.

But, the message should not be lost on Investors, that the World's Greatest Investor is buying company, after company in the Heartland - far removed, from the mania of Wall St. or the Left, or the Right Coasts...

PS: Think those Class A Motorhomes and Big 5th Wheel Towables etc - will thrive if Peak Oil delivers on it's hype ?

- I think Warren Buffett just voted with his wallet on Peak Oil fwiw... with this significant RV-rollup Purchase !

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To: SliderOnTheBlack who wrote (240)7/22/2005 9:44:12 PM
From: Fiscally Conservative
   of 41500
 
"PS: Only 200 more Rigs drilling this year than last... for Peak Oil-Mania to unfold as scripted by the Simmonsite's - there had better be one helluva depletion rate YEAR over YEAR and one helluva lot of dry holes being drilled (vbg)."

Your reasonings here elude me.

The US Dollar will be a key function here in the Oil equation. A matrix truely does exits.

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To: SliderOnTheBlack who wrote (242)7/22/2005 9:52:38 PM
From: gold$10k
   of 41500
 
... but Berkshire Hathaway's stock performance is nearly as good as XAU and more than 70% better than SPX.

bigcharts.marketwatch.com

When Warren speaks, I listen.

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To: gold$10k who wrote (244)7/23/2005 9:59:42 AM
From: anyer
   of 41500
 
Lee Raymond;eat your heart out!
money.iwon.com

Oil is cyclical; no one disputes that. The characteristics of the cycle has changed because of demand and the ageing of the large fields.It would seem to me that barring a major demand shock[ bird flu, war etc.], one should maintain a bullish bias. Dips will be shallow until something on the demand side radically changes. I will stay long E&P stocks on a trading basis until some cheap alternative energy play arrives.

Bought a bunch of GW and PDC yesterday.Also got back in VLO with earnings coming next week. All time high in short interest on OIH and OSX according to Schaeffer's. Looking to buy RIG, TDW and WFT monday.

I appreciate the boards attention to gold and silver and do sense these will be big winners;yet I have been disappointed in the action of the stocks. Will look for breakouts on Big Volume only.

Thanks to all![on edit I can't figure out why everything is underlined;not my intention]

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To: anyer who wrote (245)7/23/2005 10:13:55 AM
From: anyer
   of 41500
 
Schaefer's yesterday:



Up until today, oil had taken a bit of a beating during the past several sessions, and with good reason. Earlier this week, OPEC trimmed its 2005 demand-growth outlook by 150,000 barrels per day due to lower consumption in the first half of the year in some of the major consuming countries, such as China. Furthermore, hurricane season is proving to be a little more benign than some had feared, with rigs in the Gulf of Mexico quickly bouncing back from Hurricane Dennis and Emily turning to miss the major rigs altogether. (Of course, we're still early in the season and this bout of luck could quickly change.) Let's not forget that the price of oil has soared by about a third since the start of 2005. So a bit of a pullback was to be expected.

When I last visited oil, I laid out both the bullish and bearish cases in my article, The Battle for Black Gold. I thought I'd check back on some of the important levels I pointed out on May 20 and review a few interesting developments.

One key technical formation that drew my eye in May was the Energy Select SPDR Fund's (XLE: sentiment, chart, options) pullback to support at its 10-month and 160-day moving averages. Since that observation, this exchange-traded fund (ETF) has nicely rebounded off these trendlines and resumed its uptrend. Furthermore, the shares are now reaching for new-high territory after bouncing off support in the 45 area, which marked a region of staunch resistance in March.

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To: anyer who wrote (246)7/23/2005 10:18:40 AM
From: anyer
   of 41500
 
part 2:



XLE isn't the only one benefiting from support at former resistance. The PHLX Oil Services Sector Index (OSX: sentiment, chart, options) has ramped higher along the support of its 40-week moving average since December 2003, and, thanks to a rebound off its March high near 145, has hit an all-time high in today's session. The CBOE Oil Index (OIX: sentiment, chart, options) has enjoyed a similar advance as it keys on round-number support at the 500 level.

Digging around the sector's sentiment backdrop, I'm seeing a preponderance of pessimism among traders. Options speculators are grabbing up positions, particularly on the XLE. Peak put open interest in the August series rests at the out-of-the-money 45 strike, with around 45,000 contracts. Contrast that with peak front-month call open interest (also at 45 strike) with only 8,300 contracts. The September configuration is similar with nearly 57,000 puts at the 45 strike. This hefty accumulation of bearish bets could serve as a layer of potential options-related support for this region.

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To: anyer who wrote (247)7/23/2005 10:21:02 AM
From: anyer
   of 41500
 
part 3:
Furthermore, XLE's Schaeffer's put/call open interest ratio (SOIR) has jumped from its May 20 reading of 2.98 in the 15th percentile to its current perch of 4.77 in the 54th percentile. In addition, the SOIR for the Oil HOLDRS Trust (OIH: sentiment, chart, options) comes in at 2.49 (82nd percentile), as puts more than double calls among near-term options.

Short interest for the group stands as a potential source of fuel. In July, the number of XLE shares edged 2.50 percent higher to 48.7 million shares, just shy of its multi-year high of 53.5 million reached in May. The number of OIH shares sold short also popped 2.6 percent higher to 18 million, tagging a new multi-year high.

Zooming in for a closer look at the oil services sector, we find that short interest for its major components saw an average increase of more than 10 percent in June (July data is not yet available). Furthermore, the average short-interest ratio sits just shy of four and short interest accounts for a respectable chunk of the available float on these securities. It will be interesting to see if (and how much) short sellers increased their positions on the recent pullback in oil.

Overall, the various components within the oil sector have earned Schaeffer's Equity Scorecard rankings indicating they still have some room to run. Not only do both the OIH and XLE rate a 7.0 out of 10, but the average score for individual stocks stands at 6.5. With several of the indices and ETFs testing key support levels and pessimism lingering near extremes, the oil services sector could prove to have a few pockets of strength left within it

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To: anyer who wrote (248)7/23/2005 10:28:10 AM
From: anyer
   of 41500
 
part 4:
Overall, the various components within the oil sector have earned Schaeffer's Equity Scorecard rankings indicating they still have some room to run. Not only do both the OIH and XLE rate a 7.0 out of 10, but the average score for individual stocks stands at 6.5. With several of the indices and ETFs testing key support levels and pessimism lingering near extremes, the oil services sector could prove to have a few pockets of strength left within it.

I'll end with some insight from market guru Jeremy Grantham, who said in a Financial Times piece on Wednesday that oil has undergone a paradigm shift rather than experiencing a bubble. He concludes that those who want to short the sector "should not be frothing at the mouth until it hits about $80." That's about 40 percent more than current prices.END

IMO bull will not end until shorts capitulate.Don Coxe says that those who see a bubble in oil must be like Hannibal as he crossed the alps and kept seeing peak after peak.

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