Friday, August 29, 2014

Friday's Finalists: RRMS

Rose Rock Midstream LP (RRMS) was the sole symbol to make it to the finals out of 15 survivors from the first round of analysis. (See "Friday's Prospects".)

Only one out of the batch, AEP, failed confirmation, and three , NXPI, MMC and NGG, lost upward momentum after giving bull signals.

Both bear signals, WAGE and BRLI, have options that are insufficiently liquid to support a  bear play.

One symbol, PLL, broke out after earnings were announced, placing it under my Reset Day rules. It won't be in play until Monday.

The rest have charts that are insufficiently bullish to support their bull signals.

The finalist, RRMS, has a neutral rating from Zacks Investment Research, the service I use to short-cut my fundamental analysis. Like most companies that have "Midstream" in their names, it is in the oil business, a sector that I'm avoiding.

Energy stocks seem to account for a high proportion of the bull signals I've seen in recent days.

The companies in that sector, more than most, seem to march in lockstep. Not surprising, since it is a commodities business, and commodities are fungible.

So rather than playing energy based on whichever company is giving a signal on a given day, I find it far more useful to play the sector as a whole though a fund (XLE) or the commodity itself (USO), or at the least to pick a highly liquid carrier of my aspirations (BP, XOM, COP).

RRMS, with options too illiquid for use in a leveraged and hedged trade, and with five-figure volume on the shares, is far from meeting my needs in that regard.

I'm passing on RRMS and won't be writing any new analyses today.

-- Tim Bovee, Portland, Oregon, Aug. 29, 2014


My shorter-term trading rules can be read here. My longer-term trading rules can be read here. And the classic Turtle Trading rules on which my rules are based can be read here.

Tim Bovee, Private Trader tracks the analysis and trades of a private trader for his own accounts. Nothing in this blog constitutes a recommendation to buy or sell stocks, options or any other financial instrument. The only purpose of this blog is to provide education and entertainment.
No trader is ever 100 percent successful in his or her trades. Trading in the stock and option markets is risky and uncertain. Each trader must make trading decisions for his or her own account, and take responsibility for the consequences.

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