Independent Oils Look Buyable

 | Nov 27, 2013 | 12:33 PM EST
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Let's say Carly's right.

I am talking about Carly Garner, one of our best and most thoughtful technicians, who is predicting that oil can still fall. I agree with her about the vulnerability of the commodity and I also think that the stocks all "look" terrible. I know there will be plenty of bailers from these independent oils as we approach $90 and there will be out-and-out panic if we drop to that $86 level she says is possible.

But I want to buy, not sell, these stocks.

While I am distinctly getting the feeling that everyone in America -- perhaps save the president and Congress -- recognizes we have found a lot more oil than we thought, so the surprise factor is gone, I still think there's a huge scarcity factor. Put simply, there are a handful of companies that really have the right real estate and the right cost structure to make fortunes with oil at $86. But there are others who don't.

As these stocks break down in this thin trading, we added to Occidental (OXY) because it has a refining operation that is worth more now than ever because of the expanding spreads and considering adding to Noble (NBL) because Noble has properties in Europe that are phenomenal and has the best land in the Niobrara.

I am not saying that if you buy these stocks right now you will do well. This kind of action today presages a vicious move down, not up.

I am saying that, like Carly said, we are readying for that move to BUY not sell stocks and that's the best approach to take. A really nimble person could sell here and buy back 3% from now.

I can't be that nimble or that good, for that matter.



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