I am not adding any new watch list entries this week but I have a couple short-term trades that might be worth considering. True confessions, I own them both.
Oceaneering International (OII) spiked +8 on Friday on better than expected earnings. The stock was already trending higher before posting earnings that more than doubled the comparable quarter. Revenue jumped +37% on heavy repair activity in the Gulf. They followed the earning with a +25% hike in earnings guidance for 2006. While this is a very strong report it is a niche player in a very large market. I have and would buy them on any weakness.
However, I think the spike is overdone and we could see some retracement next week. I own the May $70 puts for a very short term trade.
McDermott (MDR) is the same type of play. MDR jumped +$10 on better than expected earnings and I believe they too will come back to earth before moving higher. I own the June $70 puts on MDR.
These are very short term trades with tight stops and I expect to be out of them probably by the Wednesday inventory numbers.
If you are looking for something else to trade I think there is a Goldcorp breakout just ahead. TIE and TRN also represent opportunities for short term trades. I am long GG and short puts (long) on TIE. I will be long TRN if we ever get a decent pullback.
Current Watch List
No entries, full position load at this time