TIME TO HEAD BACK TO THE WELL

You know I’ve been reticent about drilling for oil in this environment. I’ve advocated to sell some oils and lock in gains. However, every once in awhile The PPT shows me something I wouldn’t normally see on my own. In this case, there aren’t any notable oversold signals yet, or momo screens to reference, but a chart.

That’s right, I am about to cite a chart.

Bear in mind, my charts are smart, intuitive, not idle and lazy like the ones you prefer to draw lines on.

Here it goes.

What is this nonsense that I present to you above? It is the ‘hybrid’ score of the entire oil/gas drilling and exploration industry, which is, essentially, a combination of technical and fundamental factors. On top of that, several other things comprise the hybrid score, such as intra-day currency, commodity and treasury moves. In other words, our sub-rosa is somewhat complicated and proprietary.

Over the past week, dozens of oil stocks are down double digits. This sector has pulled back to the point that it has become buyable, especially if you’re banking on a spring revival in oil–ahead of the driving season. Looking at the hybrid score, you see we are now at the low end of the trading range for the past 6 months.

Which stocks do we want to target?

We don’t want outliers. We want to buy names that have been participating in rallies, that are big cap. Enough with the small cap time-bombs, god damn it.

Here is my short list.

CLR
AR
HP
WLL

Oil/gas and equipment

BHI
WFT
SDRL
EXH
SLCA

Keep in kind, this might not bounce tomorrow and this industry might sell off some more. But it’s likely buyable down here. Establish a process by which you can add to some names, hopefully with the proceeds from some stocks that you took profits on last week.