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TX - Texaco, Inc.Week Ended: 3/17/01
Price 65.98 P/E Ratio 15.02 52 Week High 70.21
Last Week + 3.10 Earnings Date 04/25/01 52 Week Low 44.25
Picked At 64.90 Date Picked 2/17/01 Sector Energy
Current 65.98 Open 65.50 Change -0.46
Low 65.20 High 66.30 Volume 1,381,600

Company Description

Texaco is engaged in the worldwide exploration for and production, transportation, refining & marketing of crude oil, natural gas liquids, natural gas & petroleum products. For the 9 months ended 9/30/00, revenues rose 46% to $36.70B. Net income applic. to common totalled $1.99B, up from $833M. Revenues reflect higher crude oil and natural gas prices. Earnings reflect an increase in gross profit & a decrease in exploratory costs.

Play Description

February 18, 2001

Texaco is an integrated global energy company that operates in some 150 countries around the world. The company explores for and produces oil and natural gas, manufactures and markets high-quality fuels and lubricants, operates trading, transportation and distribution facilities and produces power. This weekend we are adding TX to our list of momentum plays because of the stock’s strong relative strength. The stock established a new 52-week high on Friday of $65.65 even in light of the fact that the broad markets both finished down more than 90-points. The company was recently given an upgrade to the "recommended purchase" list at Goldman Sachs. Additional good news for TX was the signing of a new deal with Nigeria for natural gas exploration. Nigeria, Africa's top oil producer and OPEC's sixth largest exporter only joined the big players in the natural gas export market in late 1999. If the exploration is successful, TX and other parties involved could stand to profit handsomely. If you like what you've heard so far and are considering opening a new play in TX, here are a few suggestions. Look for the stock to move higher on heavy volume and hit another new high as a possible entry point. Here heavy volume would mean more than 1 million shares traded by 1:00 EST. The stock normally trades about 1.4 million shares per day based on a 3-month average. Friday's new record was achieved on 2.3 million shares. Another opportunity might exist if the stock were to bounce off support at $64.22, the 5-dma, or another support level at $63.45 or $61.98, the 10 & 20-day moving averages. In either event, the volume will be critical when considering a new play. Additional support from the Dow Jones Industrial Average (INDU) and the Oil Service Index (OSX.X) would be helpful as well. We will place a stop loss on this play at $61.88.

Picked on February 18th at $64.90
Change since picked 0.00
Stop Loss at $61.88


March 13, 2001

TX has turned out to be a catch-22 for us. As many readers are aware, we've been preaching the merits of keeping stop-losses tight. For the most part, this strategy has work well by allowing us to lock in gains while limiting our downside. However, in TX's case, it may have been better to keep the stop-loss a little loose. We were stopped out at $68 within the first hour of trading, as TX traded down to $67.60. Unfortunately, though, we missed the rebound that took place later in the session. Still, we are satisfied to exit this play with a $3.10 gain.

Picked on February 18th at $64.90
Profit/Loss +3.10 (5%) (Stopped Tuesday @ $68.00)
Best Profit +5.31 (8%)

March 11, 2001

Texaco closed the week up 5-percent and recorded yet another new 52-week high. New highs are becoming as common for Texaco as golf trophies are for Tiger Woods. This company, known worldwide for petroleum and energy products, certainly has had its share of positive energy lately. We wish all of our momentum plays did this well in the face of such adverse market conditions. TX forged ahead on Friday despite both markets selling off into triple digit losses. If you are considering jumping into TX next week, possible entry points for new plays might include a bounce off support at $69.00 or a move higher on strong volume, 1.2 million shares traded by midday. On Friday, the advance was made on volume of 2.4 million shares, well above the three-month average of 1.7 million shares. This is the kind of volume we like to see for both breakouts and follow through. Though it has not mattered as of late for TX, we'd still like to confirm buy points with a bullish move in the Dow Jones Industrial Average (INDU) and the Oil Service Index (OSX.X) when initiating new plays. We have tightened our stop loss on this play to $68.00 to secure a profit.

Picked on February 18th at $64.90
Change since picked +5.04
Stop loss at $68.00


Copyright 2001

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