The market isn't flashing anything in the way of sell signals, but investors that have been slow to put money to work so far are in a bit of pickle. With so many stocks out there extended past proper buying points, what's left to buy? It's a legitimate question because the crop of buy candidates has gotten a lot smaller.
I'm still seeing just as many compelling short steps as I am long ones, but that's not giving me reason to join the bear camp yet. For this to happen, price and volume trends in the major averages would have to deteriorate significantly. I'm still not seeing anything in the way of meaningful sell signals.
Long opportunities may be few and far between, but two stocks in the oil and gas sector have been on the move in recent days and are still within buying range
Oceaneering (OII) broke out of base in heavy volume earlier this week, helped by an upgrade from Morgan Stanley to Overweight from Underweight. Oceaneering has a nice blend of strong fundamentals and technical, always good to see when evaluating a stock. A bullish chart is one thing, but when there's a fundamental story fueling price performance, that's even better. The company provides engineered products and services to the offshore oil and gas industry. Its remotely operated vehicles (ROVs) help install valves in deep-water oil fields.
Fourth-quarter earnings are due aren't due until mid-February. Quarterly profit is seen rising 33% from a year ago to $0.74 a share, with sales up 28% to $734.2 million. In 2012, full-year profit should be up 31% from 2011. In 2013, annual earnings are expected to rise 22%.
Headed into Thursday, Oceaneering was only 2.8% past a prior resistance level of $57.45. Shares closed Wednesday at $59.11, up 0.6%.
I also like the look of equipment maker Cameron International (CAM) here. The stock recently broke out over resistance at $57.78 in light volume, but there was heightened interest in the stock Tuesday and Wednesday. Shares closed Wednesday at $59.57, up 0.8%. It's only 3.1% above its last buying area.
Cameron's flow-equipment products are also used in deep-water environments. Earnings are due Jan. 31 after the close. It's expected to earn $0.96 a share, up 25% from a year ago with sales up 17% to $2.38 billion. Full-year profit should be up 18% in 2012 and 29% in 2013.
Oil prices have been on the rise since early November despite persistent concerns about sluggish economic growth ahead. Most economists expect gross domestic product (GDP) growth of +0.6% to 1% in the fourth quarter. This year, it's hard to find an economist expecting growth better than 2%.
Whether or not oil prices head higher or lower from here shouldn't have much impact on earnings and sales growth at Oceaneering and Cameron International. Both companies provide products and services that should see continued strong demand in coming quarters.