Monday, March 16, 2015

Rule #2: Double Tap


This silly rule is from Zombieland. I thought it was an awesome movie, but then I realized I was the only person in the cinema laughing. Is my sense of humour that bad? Anyway, the rationale for a "double tap" is to be really sure that the zombie that you killed is dead. No harm making doubly sure that you are safe, right?


Well, Oil seems to be going for the double tap right now. Out to kill all the people that took long positions in Oil. Given the strength in the USD since end January (DXY 95) compared to now (DXY 100), it wouldn't be a surprise to see Oil breaking down pass its previous low. Not your typical "double bottom" in my opinion. I would actually see a double bottom as a bullish chart pattern given the strong dollar.

Perhaps now is about the right time I stop wasting time watching TV shows and finally get down and dirty to narrow down my shortlist of stocks that I want to use to play the negative sentiments of oil.

Just off hand, I think Semb Marine and Semb Corp are very tasty looking now, considering they have the firepower of the buyback bazooka mandate helping them prop up prices at the current levels. I am sure they will be chasing their counters down from these prices, but who knows, maybe they might decide to let the weak hands exit first?

But like I said, the bottom doesn't feel in yet to me. Show me a weaker USD, deceleration of rig count drop and more panic and coverage on oil, then I'm convinced. Unlike many of the other older, more experienced market vets out there, I have a much smaller warchest. With limited ammunition, I need to make my shots count, so don't mind all this caution and apprehension I have.

2 comments:

  1. dont mind me - can check out the USA oil & gas counters that are crushed in similar segments - RIG, SDRL just to name a few.

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    Replies
    1. Hey Jason,

      I don't think I can comment of them because I am not familiar with their businesses and which segment of the oil market they are in.

      However, we are at multi year lows with Oil still, so I think any company in the related industries ought to have strong balance sheets to be able to rough out this period if low prices remain.

      I would wait until a confirmation of a higher high and higher low before trying to catch the bottom on things I am not too familiar with.

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