Infrastructure has had a nice move in past few days, and once again I like all these names on fundamentals - these are purely technical trades in a traders market. Most of these names report in the next 2 weeks, as the calendar is chock full of infrastructure and solar names. Again, just like the solar names - we could have some very big moves off of earnings, but just sticking to a system and taking the conservative way out - recognizing I could be leaving good gains on the table. I expect most of these to continue to post great earnings but even the hint of some slowdown in backlog (even though these companies have nearly 2 years worth each of work!) will cause the endless parade of "projects are going to be cancelled any moment now" mantra.
I am selling 4 of my 6 infrastructure stocks as most are now bumping up against the 50 day moving average from below - 2 are peaking their heads over that resistance line - Foster Wheeler (FWLT) and Shaw Group (SGR). I'm cutting about 10-30% in most of these names. And will just have to look to buy them back at lower prices, and keep repeating the pattern - sell during Kool Aid, buy during End of Days.
- Foster Wheeler (FWLT)
- Jacobs Engineering (JEC)
- KBR (KBR)
- Chicago Bridge & Iron (CBI)
Here is a representative chart for most of the names in the group; in fact it is how many stocks I am watching look. At an inflection point. They could continue to run up and then you'd get more constructive or they could fall back from fast approaching resistance which has been the pattern of late. I don't know which way it goes, but until proven otherwise I assume future failure.
Long all names mentioned in fund; long Foster Wheeler in personal account
3 comments:
Mark,
What do you think of DWSN and OYOG at this level? I know you're familiar with DWSN (read an article of yours at Seeking Alpha). Both look very interesting to me.
Thanks,
BD
I liked CGV over DWSN simply due to CGV focus overseas. Anything tied to the US market is hurting the energy companies and DWSN is 100% US.
But I'm not in either right now and need to see better action in oil service before opening more exposure. As we work through "recession" fears I could see people constantly thinking oil is going back to $60 and in a perception is reality trade will constantly hurt those firms levered to US. (I think) Could be wrong.
Either way I'd like to see better action for anything more than a quick trade.
Not familiar with OYOG
Thanks, Mark. I'm in SLB, which is the best OES name, IMO, but am researching a few others for a little more exposure. Thanks again for your feedback.
-BD
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