Cramer's Oil Rant Makes No Sense

Discussion in 'Trading' started by AAAintheBeltway, Jan 12, 2007.

  1. from Cramer's column:

    Memo to ConocoPhillips (COP - commentary - Cramer's Take - Rating): Don't waste your money on this buyback. It will be hit with reckless abandon by the mutual funds and you will have accomplished nothing.

    At least with more of a yield -- up the dividend if you have that conviction -- you could forestall the endless shorting that's unfolding in your stock. The shorts hate to pay the dividends.

    What makes me so sure?

    OK, I am going to floor you with some technical analysis. This group's charts are the worst I have seen in many years, maybe since the dot-com oblivion days, a thought put in my head by Helene Meisler in her excellent Top Stocks service. You can't get any worse than these charts. They show tops like you wouldn't believe.

    And the worst of the majors is ConocoPhillips. Now, if oil takes a short blip up, you will have buyers feeling emboldened to buy it, but they'll just be traders trying to catch a couple of points. No more.

    The charts signal that ConocoPhillips is wasting its breath and capital with this buyback.

    I believe the charts are right.


    I don't see it. COP is up maybe 50% over two years, hardly dotcom type returns. Plus, unlike dotcoms, it has valuable assets backing its valuation. Does anyone really think the world will be using less oil in a couple years? And that horrible chart pattern? I see a trading range for a year and a half. Plenty of stocks have worse charts.