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Play of the Day (For Thursday)
Interactive Chart
Wednesday, April 11, 2001

BJS - BJ Services Company $72.60 -1.40 (+0.85)

Tuesday's Comment:

Higher prices for oil and natural gas are generating strong demand for BJS's drilling services, which should help the company to generate an increase in annual earnings of 79%. Turning to the chart, BJS shares delivered another nice rally on Tuesday, recovering 2% to close at $74.00. The advance came on good volume of 1,755,600 shares, which topped the three-month average. This is further indication that the stock is attracting more investors with each leg higher. What's more, the stock was able to gap above Monday's resistance at the previous high of $73.95 and hold ground above the 20-dma of $72.54. The short-term technical picture also looks encouraging, with bullish crossovers in the MACD and stochastic pointing to more upside strength. With all these indications, a near-term rally to $75 or $80 can be expected. For entry points, we'll now look for an upside move to encounter resistance at $75 and then at the 50-dma of $76.98. Support will come in at the 20-dma. Traders can consider entries when the stock breaks through resistance or bounces from support on good volume of 750,000 shares traded by midday. We suggest moving stops to $70 to help limit downside risk and lock in gains.

Wednesday's Update:

BJS got the thumbs up from two different brokerage houses today. J.P. Morgan and Jefferies & Co. initiated coverage of BJS with a "buy" and a "long term buy" respectively. With oil and gas prices continuing to rise, many analysts see earnings out of the oil and gas group beating estimates this quarter. On the flip side of this, the sector has seen some profit taking recently on the heels of renewed interest in techs (however brief) and also on worries over less demand of oil due to the economic downturn. We believe, however, that investor interest in this sector isn't waning. Proof of this comes from the bounce off support that many oil service stocks have witnessed and BJS is no exception. Looking at the chart, BJS bounced off its 200-dma on 4/3/01 and hasn't looked back. Although it took a breather today, its current up trend remains in tact and its 5-dma is still offering good support. Today's pullback also came on less than average volume of 1.3 million shares, which hardly put a dent in BJ's up trending OBV. In addition, BJ's MACD is continuing to build on the positive side and potentially bad earnings out of the tech sector and continued warnings might serve to bring investors back to the oil stocks. Possible new entries could be timed on a bounce off the 5-dma at $72.28 or a break through yesterday's high of $75, both on volume that puts BJS on track to do 1.7 million shares by day's end. We are keeping our stops at $70.00 to protect on the downside.

Picked on April 8th@ $71.75
Change since picked +0.85
Stop Loss @ $70.00 

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