One of the best friends a trader can have is the "blood in the streets" selloff in a given asset class.
After that kind of devastation, a trader can buy low… and sell much higher during the explosive move when things finally go from "bad to less bad." It's a phenomenon that allowed us to go three-for-three in picking 100%+ winners with our December 2008 rebound-trade series (gold stocks, infrastructure, and emerging markets).
We bring up "blood in the streets" today because this is the situation in the oil drilling sector right now. A general decline in oil prices, plus the Deepwater Horizon explosion, has hammered even the bluest of blue-chip oil drillers. Most are down 30% to 40% in the past month.
One driller we'd like you to add to your watch list is Transocean (RIG). RIG is the world's largest offshore drillship operator… and the Deepwater Horizon was RIG's ship.
As you can see from today's chart, the stock has suffered a huge fall in the past month, down from $90 per share to less than $50. According to analysts who follow the stock closely, RIG has no "company killer" legal exposure to the Gulf debacle. And while the U.S. may ban offshore drilling, over the long term, we know China, India, and Brazil would love to see those drillships working for them. Now if that knife would just stop falling…
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