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Friday, December 01, 2006

Ideas for Energy Bulls

I mentioned in Wednesday’s post that I wanted to see how our alpha analytic reacts to the Crude Inventory data before I list a few more potential alpha-generating energy companies. A decline in U.S. crude supplies coupled with OPEC threatening to cut production in December is really agitating the energy market. In fact, crude and natural gas are down as I write this, likely the result of profit-taking.

Aside from individual stocks, which I’ll get to in a bit, there are a few funds and ETF’s that investors should look at for alpha in the energy and natural resources sector. Listed below are funds that have relatively high AAS Rating Scores as well as the dates that they became “buy” recommended for our subscribers:
  1. Oil Service HOLDRs (OIH 11/8/06)
  2. ProFund Energy (ENPIX 11/10/06)
  3. Rydex Energy Services (RYVIX 11/9/06)
  4. Fidelity Energy Services (FSESX 11/9/06)
In terms of individual securities, of the 84 “Oil/Gas/Utility” companies analyzed this morning, 61are “buy” recommended, 20 are “neutral/hold” recommended and 3 are “short/sell” recommended. Even though there is an overwhelming percentage of “buy” rated securities this morning, the inherent volatility present in the energy and natural resources sector still elicits caution. Overweighting the alpha-generating component of a portable alpha portfolio with energy and natural resources is not recommended at this time.

Listed below are five of our top rated stocks this morning along with their performance since the “buy” recommendation:
  1. Hydril Co. (HYDL 11/14/06 6.18%)
  2. Oceaneering International Inc. (OII 11/2/06 10.46%)
  3. Marathon Oil Corp. (MRO 11/8/06 7.30%)
  4. Cabot Oil & Gas Corp. (COG 11/13/06 11.76%)
  5. Southwestern Energy Co. (SWN 11/15/06 9.80%)
For those looking for stocks that were recently up-graded to “buy” recommended status, here are a few worth examining:
  1. Nabors Industries Ltd. (NBR)
  2. BJ Services Co. (BJS)
  3. Questar Corp. (STR)
  4. Baker Hughes Inc. (BHI)
  5. Dynergy Inc. (DYN)
Short-Term Technical Indicators – 21-Day Breadth and Volume indicators for the Dow improved again yesterday as did the 15-Day Stochastic, which is now ever so slightly on the bullish side. However, the MACD and the 15-Day Relative Strength Indicators are weakening.

An increase in the 15-Day Stochastic indicator for the S&P 500 and the NASDAQ resulted in a shift to a bullish reading for both.

Long-Term Market Model – Bullish since August 23rd.

Investor Sentiment – The VIX remains bearish despite a modest increase to 10.91 from a close of 10.83 on Wednesday.

Asset Allocation – 100% invested within the actively-managed, alpha producing portion of the overall portable alpha portfolio.

Beta Exposure and Portable Alpha Generation
Date = Date of AAS “Buy” or “Short/Sell” Recommendation

Top Rated Major Market Derivative – Fidelity NASDAQ Composite (ONEQ 8/30/06)

Top Rated Style-Box Derivative – iShares Morningstar Mid Cap Core (JKG 11/6/06)

Top Rated Sector Derivative – iShares Dow Jones Energy (IYE 11/10/06)

Today’s Top “Buy” Recommended Stocks
  1. Alleghany Technologies Inc. (ATI 10/5/06)
  2. RTI International Metals Inc. (RTI 10/11/06)
  3. Daktronics Inc. (DAKT 10/31/06)
  4. Chaparral Steel Co. (CHAP 11/1/06)
  5. F5 Networks Inc. (FFIV 9/20/06)
Today’s Top “Sell” Recommended Stocks
  1. Whole Foods Market Inc. (WFMI 11/2/2006)
  2. SanDisk Corp. (SNDK 10/20/06)
  3. Christopher & Banks Corp. (CBK 10/18/06)
  4. Emmis Communications Corp. (EMMS 11/20/06)
  5. Red Robin Gourmet Burgers, Inc. (RRGB 11/2/06)
Today’s Top “Buy” Recommended Profund Mutual Funds
  1. Precious Metals (PMPIX 11/27/06)
  2. Internet (INPIX 10/24/06)
  3. Oil & Gas (ENPIX 11/10/06)
  4. OTC (UOPIX 8/16/06)
  5. Basic Materials (BMPIX 10/10/06)

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