Seeking help the chartists - HES?

[spikefader]

Most intelligent chartists would agree with billyjoe's statement, "Charts predict nothing".

The bottom line is people do the predicting. Charts are just a picture or a snapshot in time. They reflect 1) historical valuation and 2) patterns of behavior. And all the added lines and indicators are just methods of projecting and interpreting the historical price data. From those prices, patterns and lines, we are able to draw conclusions or assumptions, which may or may not be correct.

But all that said, a chart is a very good tool to use when attempting to define current value. It is by examining past valuations that we can attempt to estimate current and future valuation. Correct and timely valuation will result in profit-making opportunities.

Charting identifies patterns that are suggestive of a certain outcome, and they do a great job of reflecting great areas of risk/reward. In the end, a pattern can be broken, and risk can be taken. An intelligent chartist will agree with all that.

OK, so negative news comes out and market participants do something with that information, i.e. sell........and sell in size, so bidders get swamped and exhausted, price support gets broken and price falls. People start asking lower prices, bids drop off, and price might even plunge......for a while......until it stops. And where do you think price will finally stop falling? Why, at a price support location of course....or an area that's lower on the historical price chart that finds the bidders with their cash. And when the drop stops, people start buying at the asking price and bidders chase the ask, and price goes up.

The bottom line is this: A chart doesn't predict anything; it simply reflects. What does it reflect? Historical price reality.

Things can be drawn on the chart, and one might interpret those lines relative to historical price behavior....and where we see good reward versus good risk we can choose to do things. One can "predict" all they want, but ultimately no person controls the market and no person can know future price action with certainty. Future price action is always and forever uncertain.

[New-born baby]

MM,
Do you really need to sell some this week? IE, if you sold a call, and the strike requirement wasn't met (so that you keep the shares), would that be a bad thing for you? If not, I like that $1.95 call play.

[mrmarket]

MM,
Do you really need to sell some this week? IE, if you sold a call, and the strike requirement wasn't met (so that you keep the shares), would that be a bad thing for you? If not, I like that $1.95 call play.

No..but I have a boatload of it in my 401K so I need to diversify.

[jiesen]

Does your 401k allow options trades? mine doesn't, nor does my rollover account.

[New-born baby]

Hes

Here's the latest on HES . . .
Stock Split Notices Investing Q & As Glossary
1) MARKET SUMMARY
> >From "The Daily" at InvestmentHouse.com
So much for fireworks.
- Market slips out of expiration quietly, fighting off bad news all week.
- Best Buy warns of a slow 2008.
- New York manufacturing report dives.
- Michigan sentiment falls sharply.
- Despite negative economic headlines, more and more solid stocks are setting up good bases.

Market Summary (continued)
After a quiet expiration week through Thursday we were expecting some volatility and volume Friday. The volatility was limited to two big runs for the day, down into lunch, up into the close. Volume was limited; not to any part of the session, just limited. The whole week showed limited volume. Some minor distribution, some minor accumulation, nothing major as it was below average all week.
The Friday session started down and had a hard time getting up with the news. BBY warned of a slower 2008. The New York PMI dove lower; at -11.72 it was well below the 7 expected and the 9.0 in January. Not a lot of positive sentiment in the manufacturing sector right now. It could be any number of reasons from the credit and mortgage issues to the rhetoric on the campaign trail, but the net result is a bleaker outlook from the purchasing managers. Then Michigan sentiment rolled out at 69.6, down from 78.4. Those are recession levels last hit in February 1992 and well below the rather high 81.8 level in the 2001 recession. The negative reading puts Michigan sentiment down 23% from August when the credit issues spurred the Fed to act. Pretty negative scenario.
The market sold off ahead of and after this news. Then it bottomed and rallied back to the close. Only SP500 made it positive, but the other indices were within spitting distance after coming back from substantial though not huge losses as seen the prior week. Some down, some up, then closing basically flat on the session and holding onto some of last week's gains.
Read "The Daily" Entire Weekend Summary
Here's a trade from "The Daily" and insights into our trading strategy:
Chart by StockCharts.com

HES (Hess Corp.--$90.65; -0.55; optionable): Oil and gas refining/marketing
Company Profile
EARNINGS: Announce 1-30-08
STATUS: Double bottom w/handle. Huge surge in December capped out HES' move for the year, and then it slipped into the current 7 week base over the 50 day EMA, similar to the one from October to November that set up that prior run. Nice handle last week and HES is set up to make the breakout and run to the prior high at 105.
Volume: 4.085M Avg Volume: 4.828M
BUY POINT: $93.55 Volume=7M Target=$105.45 Stop=$88.65
POSITION: IGG ER - May $90c (57 delta) &/or Stock
Learn more about "The Daily" with Stock Picks! - Issued 5 Times Per Week

[mrmarket]

I sold about half of what I had intended to at an average price of 88. Now I am holding out til 105.

[New-born baby]

I sold about half of what I had intended to at an average price of 88. Now I am holding out til 105.

Smart guy. And now $105 may be too low.

[New-born baby]

Hes

HES shows a target of $121 at present . . . and it pays a small divy too.

RIG shows a bearish immediate target of $120.

VLO, currently $50, is looking for $39.

[New-born baby]

HES moving nicely into $108+ territory, Mr. Market. I'm looking for $139+ on it.

[mrmarket]

HES moving nicely into $108+ territory, Mr. Market. I'm looking for $139+ on it.

no complaints here

[New-born baby]

I wish I had all of your HES shares . . . . this bull is running hard! PnF likes it to $163.
Daily says next target is $132, weekly says $132 also.

[mrmarket]

I wish I had all of your HES shares . . . . this bull is running hard! PnF likes it to $163.
Daily says next target is $132, weekly says $132 also.

I could live with $163

[IGETTHEPICKSFIRST]

Next Question

05/16/2008
[HES] Hess Corporation ($120.320) - Oil - HES moved to a new high when the stock broke a double top at $120, its third straight buy signal. The stock is now 20% above the middle of its 10-week trading band and only a few points from the top of the distribution. This is still a high attribute name and demand is clearly in control. The first sign of a near-term breakdown would be at $110, meanwhile the long-term price objective is $163.

https://WWW.AUSTINDUTTON.COM

http://www.fop5.org/serendipity/

[mrmarket]

Pretty Good Write up on Oil in the Motley Fool


Author: RaptorD Number: of 31646
Subject: OT: Oil Change Date: 5/11/08 4:37 AM
Post New | Post Reply | Reply Later | Create Poll Report this Post | Recommend it!

Recommendations: 29
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Among others I think my friend whatismyoption thinks oil prices might crater soon. He asks regarding the price of oil: So Mike and Dan are you saying it IS different this time? http://boards.fool.com/Message.asp?m...7&sort=whole#2...

While I can’t speak for Mike, I actually gave no prediction at all so let me say this: The price of oil may or may not be at a temporary short term peak. I would not be surprised to see it either rise or fall by as much as 40-50% in the next 6 months. Maybe that is the answer to the question above and the discussion is over. Or, maybe we could consider:

Maybe someone who thinks that gas will ever be much cheaper for any meaningful length of time than it is right now in May of 2008, is likely unfamiliar with (or has forgotten) the statistics on oil consumption and world population and the need for power to run our civilization. This is suddenly an emotional issue for many so I'd like to start afresh and go back to the basics.

Population
It took 60,000 years for world population to go from 2 to 1 million. It took only 950 more years to reach 1 billion, approximately in the year 500 BCE. Yet to reach the 2 billion milestone only took another 500 years in the year 1 AD. Now, 2,000 years later, the population is ~ 6.5 billion. Can you imagine the chart of this data? Hint: It's exponential.

Population Maxed Out
Experts disagree on what population the world can nourish, but even with the diversity of opinions regarding maximum population that can be maintained on earth, the population is going to reach ALL estimates in the near future. We’re at that stage where, like information, population is at that stage of growth where we are reaching a portion of the curve on the chart where its shape turns sharply upward.

The Significance of Physical Power
What does all this have to do with oil? It’s not just oil itself that is important, it’s power. Power in any form. During the history of civilization there is one major factor that has determined the growth and power of, and set the limits of, any distinct civilization. Power. Manpower, slave power, oxen power, horse power, hydro power, electrical power, wind power, now combustion engine power and whatever-is-next power. Any form of physical power that can be tamed and controlled by man. Your civilization either had it or you didn’t. If you had a lot of power, in whatever form, your civilization was headed for great things because it allowed a few people to feed the rest of the people, freeing some to specialize and do different things to add value to the economy. If you had less power or just your own manpower of one, you were headed for the fields to harvest crops for your own family because there was little or no other power to do it for you. You can’t build the great pyramids without power, period. Likewise, Chattanooga, Manhattan or Cincinnati.

Oil is Power
During the 19th century enter the combustion engine. Need a hundred horses? A combustion engine can do that for you. Need 1,000 horses? A big combustion engine can do it for you. Need a million horses for power? We’ll build bigger engines and use several of them together, no problem. We’ll feed them diesel fuel. Whatever you need we’ll feed it oil in some form and out comes the power on the other end. This is the modern Western civilization’s claim to fame. It allowed the West to rise to power in only a few short generations. This spectacular rise was unheard of in all previous history.

The Recipe for Oil
There’s only one problem. That sticky, gooey stuff discovered in Texas that had no use whatsoever that we now call crude oil and powers our civilization. (If you doubt this, read no further. Let’s just agree to disagree.) It took millions of years to make this crude oil and the conditions had to be just right (plus the ingredients had to be mixed at the bottom of an ancient sea, at the perfect temperature range no less.) Since I was a kid (1960-s) I was told we would run out of oil some day in my lifetime. Yeah, yeah, so what. In the 1970’s I barely began to comprehend the limitations but I knew we would figure out a solution, an alternative to oil, if we ever really needed to. This is the United States, we are the most powerful nation on earth. We can sure as hell find some new power base to replace oil. No problem, we can do. By the 80’s and 90’s I was married and was “career-driven.” I had no time to worry about an oil shortage. Oil shortage? Maybe it will come (again), maybe but who really cares, I have money to buy gas no matter how expensive it gets and I’m not giving up my cars (note the plural.)

Modern Times
Let’s fast-forward here, through an embargo or 2, learn to dance the OPEC Shuffle and such to Y2K. 2 millennia since Christ walked the earth, and now the Chinese want to catch up with the west? Good luck! Oh, and India too, don’t forget India. Yeah, yeah. I suppose South America would like to catch up to the rest of the West too, eh? Hell, why not? While we’re at it, let’s throw in the Middle East for good measure, at least they actually have lots of cash (That’s the US dollar we’re talking about as “cash” here, don’t we all know?) and might have a realistic shot at joining us in economic equality within a couple decades. Thank goodness they don’t have a huge population.

Follow the Cash (And the Debt)
Now It’s May of 2008. Our currency is dropping like a rock. We have national debt that has no statistical chance whatsoever of ever being paid off. 60% of Americans have serious credit card debt. Many of those make monthly payments and many of those have no chance of paying off their cc debt before they die. Ooh, but the banks love this, this is their dream scenario! “Hook ‘em for life! There’s one born every minute! Bleed ‘em ‘til they die! Hey, free Frequent Flyer Miles and a toaster to all! Sign ‘em up, team! Go get ‘em!”

Ha, they got us alright and we should have known better. So now we are collectively in debt that we can’t pay off—ever. Our nation, our families, our citizens, all In debt.

Common Ground
If we can agree that the earth can nurture and maintain only so many humans, and if we can agree that we are nearing the plateau beyond which the population must shrink by some mechanism and that if we don’t address the problem with large-scale war or a man-made catastrophe having the effect of seriously reducing the world population, that nature will sure as hell take care of the problem for us with plagues, famine and disease. It has to, that’s nature’s job, to keep the planet in balance whatever the intelligent humans do to it. It’s not nice to fool Mother Nature. Eventually she will take care of the problem by her own device if we don’t. She has to, it’s the natural law of the universe. Power is limited. Food is limited (and requires power!) Not enough food? Death by Starvation. Not enough housing? Death by Exposure. Not enough clean water? Death by thirst. Not enough oil (No power)? Well, we know what happens to civilizations with no power. A slow—or not—fade into history for that civilization. And for the survivors, it’s back to the farm for 80% of them.

There IS a Limit—We’re there
Too many people using too much oil is unsustainable no matter how you slice it. Personally I don’t like farming and I’ll tell you another secret. I’m scared of horses, they scare me silly. There’s got to be another way. But even if you disagree with my timeline (bring your facts, tell us how we’re going to get through the next decade or two, please.) then let’s sit down and look at some charts of the world’s population, oil reserves and let’s estimate that growth out into the near future and chart the results. The world is changing so fast that I can’t keep up now. But here’s a sure bet: it’s going to change so much faster from now on—until our economic power turns to a little dot in history.

So let’s get busy finding an alternative.

Actionable Conclusions
I have no idea what the price of oil will be next week. I think it will be considerably higher 18 months from now. I would bet my entire net worth (13 rubles unless the dollar falls more) that 7 years from now the price of oil will be several times what it is right now. Make that 4x if you are tempted to take the bet or just so we have a number you can hold me to.

<<<<< OR >>>>>>

The world’s population will decrease and the rate of population growth—Sorry, this is bad news—will turn negative. Population will decline. Mother Nature says growth is limited and she’s the law on the planet.

In the time it took to write this, do a little low-intelligence research and look up a few links (~ 90 minutes) approximately 197,260 babies were born on the planet. 5% of them were born in the US. Some of the others will immigrate here. Most of them, no matter where they were born, will want some form of personal transportation every day. Until something changes, that means they will want to drive an auto, and they will probably want all the roads and bridges and all the necessities required to drive it. Oh, and a few volts of juice for the computer too, plus street lights, traffic lights and oh! Air conditioning too (Wow, this is great! You Westerners have all had A/C in your homes for how long now? Wow, it's my turn, I want that!)

So what will the price of oil be 10 years from now in 2018? How about 2028? Uh-uh. It’s your turn to do the math. Here’s some very basic data to get you started. Choose your own sources That's the problem, there is considerable disagreement with the oil data, except that most experts agree we're at that point where opinions matter less and the results of most opinions are merging together because the oil well is running low.)

Very Basic Sources
World population trends: http://en.wikipedia.org/wiki/World_population
World population projections to 2300: http://www.un.org/esa/population/pub...longrange2/Wor...
World population clock: http://www.census.gov/main/www/popclock.html
Consumer Debt—Maxed Out: http://video.google.com/videoplay?do...32044369494646...
The timeline and consequences of shrinking oil reserves: * http://www.energybulletin.net/23151.html

Conclusion (Mine Only)
There is only one answer to increasing oil demand and decreasing oil supply. Find an alternative power source. That is all, end of message. We need ideas, answers and leaders to bring it together. Let’s get busy.

But Where is the Price of Oil Headed?
Oops, sorry, I thought we covered that already. Next week, don’t know. Next month, don’t know. Next year …. Well, if I had to guess … The price of oil, long term is headed up, up and away.

Conclude what you will. My net worth is at stake here but that’s nothing. We’re talking about our children’s future here. Kind of like our predecessors talked about Social Security for we baby boomer USians. You remember Social Security, that safety net that for us boomers went bye-bye a decade or two ago?

Ha! Social Security is history. That reminds me of cheap oil.