New Plays, Saturday, 04/16/2005
HAVING TROUBLE PRINTING?
- 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
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
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