I screened a stock on Monday named SandRidge Energy (SD) in a post titled, My Latest Stock Watchlist and noted that it made just about every screen I ran over the weekend. I looked back at scans from earlier in the year and it did make a few of them but didn’t grab my attention until now.

SD – 44.28, made almost every screen I ran this week (buy near $40)

Stock of the Day
Sandridge Energy Inc. (SD)
Monday’s Closing Price: YGE - $44.38

Sector: Oil & Gas
Industry: Oil and Gas Production
52-week Price: $28.50 - $45.40

SandRidge is an independent natural gas and oil company with its principal focus on exploration, development and production activities. The Company also owns and operates drilling rigs and a related oil field services company with focus on exploration and exploitation of its significant holdings in West Texas. SandRidge operates in four segments: exploration and production, drilling and oil field services, midstream gas services and other.

The stock recently logged a new all-time high on increasing volume as it broke-out above the ideal entry area of $41.15. Unfortunately for me, it broke out during the week of my vacation (and return). I can’t say that I would have bought shares but I am interested now. I understand that crude is selling at all-time highs and some people are calling for a top but I am not about to listen to them. Money is still to be made in this industry. By the way, SandRidge is in the #1 rated industry group as produced by Investor’s Business Daily.

Net income was 137% higher than a year ago (3rd quarter) with revenue increasing by 71% during the same time period. Natural gas and crude-oil production jumped nearly five-fold. Shares closed at $31.20 ahead of the 3rd quarter report; it has since given investors a 40%+ gain in a few months.

SD is starting to outperform a few of the top stocks in the top rated industry group, something I do make note of. For example, SD is up 24% YTD as the industry groups as a whole is up 18% YTD. As you will notice, SD shares company with some very respectable names (stocks).

Sister Stocks (Top Rated Industry by IBD):
Range Resources Corp - RRC
Continental Res Inc. - CLR
Quicksilver Resources - KWK
Bois D’Arc Energy LLC - BDE
Petrohawk Energy Corp - HK

Potential Trade Set-up:
Ideal Entry: $41.15
Risk is set at 1.0% of total portfolio or $1,000 of $100k
Stop Loss is 10% or $37.04 (breathing room to $36 is okay)
Number of Shares: 243
Position Size is $10,000
Risk is $4.12
Target is $55+ (based on future growth)
Reward-to-Risk is 3.36-to-1 with ideal entry; less with current price

Continue reading to see the impressive institutional numbers, general fundamental numbers and basic technical analysis that make this stock stand above other recent IPO’s. Net income, revenue, earnings and industry (global) growth make this an ideal stock for my watchlist. I am looking for young companies with increasing earnings and sales.

Read more »

Interesting Chart Snapshots:

Long Term Strategy on how to trade the US Dollar (it’s too simple for words):

Click here to open the US Dollar chart to a larger view (with more detail) of how accurate the 10-week/ 30-week moving average crossover signal (up or down) has been this decade.

Below is a chart of crude oil (the 10-week/ 30-week moving average crossover works just as well here):

As crude rises, a majority of the market’s oil leading stocks are heading in the opposite direction. This is interesting and I really started to take a deeper look this weekend after Howard mentioned this on his “Time to Golf” post:

“Oil stocks are being murdered, despite robust per barrel prices. This tells me, someone wants to raise cash–in a very big way.”

I have owned and followed Petrochina on this blog throughout 2007 and can’t ignore the quick 10% correction it has made over the past couple of weeks.

All of the leading stocks listed below are making the same type of pattern correction as the price of crude continues to increase. It’s very interesting and I agree with Howard that someone big is selling into the strength. Other than that possible observation, I really don’t have much more to say on the subject so I will let the charts do the talking.

Read more »

I am revisiting a combo index chart that I highlighted numerous times last summer as the NASDAQ started a new leg up since the bull market in 2003. I described the chart as such in a post titled Can the NASDAQ – Crude Oil Index predict Bulls & Bears in June of 2006:

The chart is a combination index that I created using Stockcharts.com advanced tools. It combines the average close of both the NASDAQ and crude oil contracts over the past 10 years with a 200-d moving average. As you can see, the progression of this chart has called every major up-trend and downtrend before it was about to happen. The gray line on the chart represents the actual close of the NASDAQ index over the past 10 years (this line varies from the combo index).

Viewing the current progression of the chart, we can see that the combo index is violating the 200-day moving average for the first time since last summer (August 2006) when the NASDAQ was trading about 20% lower than current levels. Looking back, the NASDAQ has always corrected, even slightly when the combo index crosses back below the 200-d moving average. Please see all red highlighted circle areas on the yearly chart. Our best idea of what may happen can come from the action back in late 2003 and early 2004. The NASDAQ made a multi-month consolidation before trending higher again.

The NASDAQ has gained more than 100% since the low in late 2002 and this is the first time since the bubble burst that the combo index is trading above the long term trendline (dotted black line) so things may be different this time around.

No one knows what will happen but I will remain cautious since this secondary indicator has been fairly accurate over the past ten years. Couple that with the fact that the NASDAQ is trading about 30% higher than it was last year at this time and the fact that crude oil is trending higher in a yearly cup shaped base. Many indicators scream correction but the market keeps trending higher. Price and volume will remain the primary indicator!

This post, Will the NASDAQ be 50% higher in 6-12 months? details some more information about the mysterious combo index that I follow as a secondary indicator:

…The combo index highlighted the relationship of the two indexes and actually told us on a higher level when and where the market was making rallies or starting major down trends over the past 10 years.

I asked this question on August 23, 2006:
Will the NASDAQ be 50% higher in six to twelve month from this year’s bottom?

Well, it didn’t gain 50% but it did manage to tack on 30% - NOT TO SHABBY!