Implications
Are Clear for Oil Service and Drilling Sectors
by Joseph Granville
The Granville Market Letter
Seeing oil
cross $28 a barrel this past week, attention is once again directed
back to the oil service and drilling sectors. Here the charts
are currently beckoning with many key upside breakouts to look
forward to. The implications are clear. The stocks move in concert
and thus a key upside breakout in any one of the stocks implies
that they will all move up.
Forest
Oil (11-3/4) -- Stock
here looks situated to make a major upswing from an area with
strong support at 9. Once through some resistance at 13, stock
would then appear to be underway for a further upswing to 18.
Then we have twin tops at 19 to contend with. That together with
the runup to 18 would comprise a major triple top formation at
the 18-19 level. Once through that a move to 23 can be projected.
Buy the April 12-1/2 calls. Place stop loss at 8-3/4. (NYSE-FST)
BUY.
Frontier
Oil (8-3/16) -- Another
key oil stock is seen here on the verge of having an important
technical upside breakout. An expected move above 8-1/4 will
then be followed by a challenge of the 1998 high at 9-1/4. Longer
term, anything over 9-1/4 would project to 12-1/2. Sop loss at
4-3/4. (NYSE-FTO) BUY.
Global
Marine (18-15/16) --
As this is being written, Global Marine appears to be on the
verge of breaking out above a double top at 18. That would then
produce a challenge of the old high at 20. Once above 20, 26
then comes into view. Buy the April 20 calls. Place stop loss
at 14-7/8. (NYSE-GLM) BUY.
Oceaneering
Int. (17-1/2) -- Here
we have almost a perfect replica of Global Marine. Previously
we had been stopped out at 21 last September for a gain of 108%.
That was followed with a decline to 12 by December. In the meantime
the stock had had a technical rally back to 16-3/4 in November.
Now the stock is about to break out above that November high
for a double top breakout similar to that about to be enjoyed
by Global Marine. The outlook is very similar, an extended rise
ahead to 23-1/2 and ultimately 27. Buy the April 17-1/2 calls.
Place stop loss at 13. (NYSE-OIL) BUY.
Parker Drilling (4) If the message of all the other oils shown here is correct, then Parker Drilling is a must buy at this time. It certainly has the right chart, bottoming a year ago at 2-1/4 and building a fine base pattern since then. Now the 12-month high at 5-3/8 looks very attainable in the weeks and months ahead. But that will be exceeded and that breakout will carry the price to 8 and 10. The stock currently is seen to have very little risk. I would have to currently rate it as head and shoulders above all the current low-priced buys (NYSE-PKD) BUY.
Market Commentary: Now concentrate on getting out of high priced blue chip stocks and the wild Nasdaq swingers. The outlook does not look good at all for these over the next few months. My strategy of suggesting some low-priced stocks to buy is a defensive strategy. You can't get killed falling out of a one story building."
Editor's Note: Joseph Granville is editor of The Granville Market Letter, P.O. Drawer 413006, Kansas City, MO 64141, 1 year, 46 issues, $250. The Granville Market Letter covers stocks, options and gold. Granville is offering Bull & Bear Online readers the next 4 weekly issues for $31. Write to the above address of call 1-800-876-5388.
