OI Technical Staff : 10/16/2005 9:59:59 PM
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Tab Gilles : 10/16/2005 9:51:30 PM
Taking a look at the energy markets and Murphy Oil (MUR).It appears that the consumer has backed off on the gas pedal, refineries are returning to service, and crude prices are falling. Pretty soon, we will be able to celebrate gas prices dropping back to low $2 range per gallon.
Have we as Americans learned to conserve? I don't believe so. The problem is that nothing structurally has changed. U.S. refineries will continue to operate at more than 90% capacity for years. Workers will need their gas guzzler SUV's to go to work. Yes, there's been an attempt at hybrid vehicles, but will it grow?
I'm looking at the current sell-off in the oil sector as a potential buying opportunity. There's still global demand from India and China. There have been no new refineries built and preoduction will remain at full capacity.
Murphy Oil (MUR) Back on 9/16 I alerted MM readers that MUR hit my buy/entry level, just under $49, currently @ $44.35 off (- 9%). [see 9/16 1:34 PM post]. Link
On 10/4 6:52PM post, I pointed out to watch the weekly MACDs for a bullish crossover, which had been a buy signal in the past.
Oct 6th, 10:29 AM I posted that the energy stocks were in a deeper sell off than expected and to expect support at the $42 Fibonacci Retracment level.
On the 7th, 12:39AM I pointed out that MUR low valuation when measured by its P/E and price to sales ratio is less than 1, which made it very attractive.
So, where does this put Murphy Oil?
I was informed by a MM reader that I have never assigned any stops to MUR. Correct, I haven't. My initial entry point buy was that an entry point, to where I would look at adding to on further corrections. Being that MUR would be a longer term buy, not a short term trade. I apoligize for not being clear on that. However, I believe that stops are subjective to each investor/trader based on their own risk tolerance levels. Some may feel that -2% is the most they can tolerate, some -10%.
I entered MUR based on a moving average. I also take into consideration MACD, RSI, Stochs, Fib Retracements and trendlines. I aslo agree with the longer term energy outlook that Jim Brown has, that one should have exposure to the energy sector. Referring back to my opening remarks-"I'm looking at the current sell-off in the oil sector as a potential buying opportunity."
So, is MUR done selling off? Link Link Link
I'm going to, as always, say look at the charts. Their telling me RSI is oversold, Stochs oversold, MACD is over sold, not yet given a bullish crossover. Current support at $42, next $37.50 level.
Earnings announcement Oct, 25th