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VLCCF None

- Editor's note! -

We are not adding many new plays to the newsletter this weekend and it's not for lack of candidates. In reality the number of bearish candidates is overwhelming. The damage done by the Dow's 420-point drop in three days and the similarly impressive declines in the S&P 500 and the NASDAQ Composite is very widespread. While we do expect more weakness on Monday, and maybe on Tuesday, odds are very good that an oversold bounce will hit this week. Therefore we do not want to add new bearish positions when we could be facing a very sharp oversold bounce in just a couple of days. We would prefer to be patient and wait to see just where the coming bounce fails. Then we can begin to choose what candidates would do well as bearish plays. The opposite holds true for bullish plays. We do not want to add new bullish plays this weekend if we're facing another decline on Monday. We would prefer to wait and see where and when the market bounces before considering new bullish plays. Rest assured that we will be looking for the best entry point on both bullish and bearish plays this week.

New Long Plays

Knightsbridge Tankers - VLCCF - cls: 39.75 chg: +1.04 stop: 37.90

Company Description:
Knightsbridge Tankers Limited is an international tanker company involved in the transportation of crude oil. The company's fleet consists of five double-hull very large crude oil carriers (VLCCs). (source: company press release)

Why We Like It:
We like VLCCF for multiple reasons. First and foremost is the stock's relative strength. This past week while most of the market has been crashing lower shares of VLCCF have continued to consolidate sideways. Yes, the stock did dip on Wednesday and Thursday but the stock ended up producing a new higher low in its bullish trend of higher lows. VLCCF even added 2.6 percent on Friday while most stocks were sinking. We also like VLCCF because crude oil has pulled back toward the $50 a barrel, which should be significant support. A bounce in crude should help push tanker stocks higher too. Plus, as investors focus on Q1 earnings there could be some momentum in shares of VLCCF. There is a limited supply of oil tankers in the world but demand for the oil they carry continues to climb. This has allowed the whole industry to raise their prices. We also like the Point & Figure chart for VLCCF. The P&F chart has recently produced a bullish triangle breakout buy signal that currently points to a $70.00 price target. Our strategy is simple. We want to go long once VLCCF trades over the recent April highs and target a short-term move to the $44-$45 level. Our time frame is before the company's earnings report in May. We will use a TRIGGER at $40.31 to open the play.

Picked on April xx at $xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 05/05/05 (unconfirmed)
Average Daily Volume: 366 thousand
 

New Short Plays

None today.

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