James Cramer had an interesting observation about Schlumberger (SLB – or "slob" as it’s known in trading circles) yesterday on Realmoney.com. He indicated that the stock had been strong because a large money manager just had to own the stock, no matter what price…
We all know that there’s one big institutional buyer of Schlumberger, a big fund trying to make it a core position. We all know that the guy is in a real hurry and relentless and doesn’t care if oil goes up or down.
But now that the stock has moved into the stratosphere as the group languishes, I have to think that it might be right to go short it vs. one of the other drillers.
Cramer suggests a long Halliburton, short Schlumberger trade. However, I would just stick to a one sided trade – similar to the James Altucher one-sided-pair-trade as he described in his book Trade Like a Hedge Fund.
The reason I think this trade could work is that both SLB and the OSX have hit DeMark Sequential 9 Sell signals. In addition, the oil index could be tracing out a double top.
Finally, the price of SLB has completely disconnected from the price of oil, as shown on the chart below. Typically, SLB and oil move in synch with one another. However, in the past three weeks, SLB has gone parabolic, while the price of oil has actually gone down. SLB is represented by the black line on the chart.
What a joy to find someone else who tnhkis this way.
The reason I think this trade could work is that both SLB and the OSX have hit DeMark Sequential 9 Sell signals. In addition, the oil index could be tracing out a double top.