Thursday, June 5, 2008
MXC PDO FPP Preparing To Squeeze As Oil Headed To New Highs On Another Round of Dollar Selling...
Oil has now completed a 50% retracement of its move from the $110 breakout level to the recent high of $135. After testing the $122.50 retracement level we saw an explosive +$5 move up in crude today on the heels of another round of dollar selling pushing the Euro back above $1.56. This move was triggered after ECB president Jean Claude-Trichet stated that the European Central Bank was prepared to raise interest rates next month which would again put new pressure on the dollar as higher interest rates overseas tend to push up demand for euros as global investors seek to lock in higher rates. Furthermore, looking at the chart of the FXE which tracks the EUR/USD we can see that there is a near perfect double bottom at the $1.54 level, and today seems to be the beginning of the next leg up which we firmly believe will take the Euro back to the $1.60 level thereby pushing crude back to new highs above $135. Moreover, note the strength in MXC PDO and FPP on the charts, as crude oils +$10 move off its highs only brought new buyers in creating nice consolidation patterns in all 3. All 3 are trading above their 10 day EMAs and we view this as a sign of strong accumulation here at these levels, and we expect short squeezes to commence in the very near future as shorts have now found themselves trapped in these low float energy stocks. Another round of momentum brought on by new highs in crude oil have potential to push all 3 above their recent 52 week highs. As such we have taken positions in both PDO and FPP at $18.60-18.70 and $5.02-5.07 respectively. While we would have liked to play MXC as well, the liquidity is a bit too light for our liking.
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6 comments:
can i buy your crystal ball please!!! i've never seen anything like this, your calls are so accurate it's not even funny
You're crazy cool man.
Dude seriously you're absolutely amazing. I heard multiple rumors that you've had offers from every major wall street bank but turned em down, is that true??
I have been impressed by your calls but am wondering about MXC, seems to me a company that has gone from the low $3 to $50 in 6 months with little to no major changes is somewhat suspect.
Do you have any additional info that you can bring to light as 2 employee
and suspect prospects scare me on this pick....I do like the PDO prospects and loved you WEL call as they have real earnings and great upside.
Thanks and keep up the great work. You are one of the few bloggers who give great insight, summary and company reviews.
mfernandes, these 3 stocks are small cap stocks that we believe are benefitting from higher oil prices due to the fact that they are unhedged. PDO for example earned .22 with Oil averaging ~$95, they will obviously earn much more with Oil averagin maybe $120 this quarter. Same goes with MXC and FPP. SInce we remain Oil bulls we have to like small cap energy stocks who are unhedged. Of course, we would rarely play stocks with 2 employees, we are just using these as a trade as moves in small caps with strong technicals can be ferocious. Of the 3 however we like PDO the best.
Another unbelievable call Nostradamus!!
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