You Won’t Get Another Entry Point This Good for Years

Keith Fitz-Gerald Nov 05, 2014
41 

Today I’m going to give you access to a recommendation I released just hours ago to paid-up members of my specialized trading service.

I’ve never done this before, and frankly, I won’t do it often, because it’s not fair to subscribers who are paying thousands of dollars for my profit recommendations.

But this is too big not to share.

In fact, I don’t think you’re going to see another entry point like the one I’m about to share with you for years.

So let’s cut to the chase with today’s opportunity. It’s hooked directly into one of the “Unstoppable Trends” we haven’t talked about yet and it involves a Tactic that’s ideal for market conditions right now. So I want to make sure you know how to use it.

What I Told My Geiger Index Members

Oil got smashed to three-year lows yesterday following a Saudi price cut that traders believe paves the way for even lower prices in the months ahead. Not surprisingly, many great companies related to energy have gotten slammed in a classic “guilt by association” move.

For millions of investors, this is a watershed moment. They pay huge amounts of lip service to wanting a correction, yet now that it’s happening they are completely panicked. Many can’t take their fingers off the sell button.

I say you use that to our advantage and make a move to pick up one of the energy industry’s strongest players – Halliburton Co. (NYSE:HAL), which was off a whopping -5.99% Tuesday alone.

Right now there’s a classic “hook pattern” forming, which you can see quite clearly in this chart from YahooFinance.com highlighting Tuesday’s trading action. All three elements – falling price, a horizontal base, and a large volume bar – are there, confirming that this is an ideal entry point.

If you’re not familiar with the term, a “hook” is a pattern formed when institutional traders squeeze the weak money out of a trade and proceed to take it in the opposite direction after doing so; in this case that’s up.

Hooks are time-insensitive so they can play out in minutes, hours or even days. You’ll know a hook when you see an extended price movement in one direction that is accompanied by a dramatically higher bar at or near the bottom that signals capitulation. That, in turn, is followed by a period of digestion or accumulation before prices reverse.


So here’s what to do…

Featured Tactic: Lowball Orders

One of the simplest yet most powerful orders any individual investors can use is the “lowball.” I love ’em – especially in market conditions like these – because they can help you grab quality stocks on the cheap at exactly the price you want. Moreover, they’re one of the few orders that cannot be gamed by institutional traders who would otherwise love to separate you from your money. And, finally, there’s no risk in “hanging” the orders out there because you miss 100% of the shots you never take – to paraphrase hockey legend Wayne Gretzky.

Here’s how they work.

  1. You line up with one or more of the Unstoppable Trends we’re following.
  2. You select a stock that’s beaten down or otherwise out of short term alignment with long term valuations, fundamentals and earnings potential. Ideally, it’s not just any old stock. I talk constantly about maintaining a “buy list” of companies you want to own if you got the opportunity to pick them up at a dramatic discount. To me, this is Apple at $70, Tesla $200, or even Facebook at $60. Your list may differ; my point is that you have a list…at all times.
  3. You pick an entry price that matches your expectations, your risk and your belief about what your intended purchase is really worth. In most cases, lowball orders align nicely with logical “support” or previous lows that can be chosen based on the time frame you’re trading. While there is no hard fast rule here, many traders find being within 10-15% of the most recent annual low is fertile hunting in choppy markets.
  4. You place your order to “buy XYZ at $ or less GTC – meaning “Good till cancelled/”
  5. Then you wait for a price dip. Why really doesn’t matter. It can be an overreaction to “bad” news, a sector pullback, a down day in the market, or anything else.

What you’re hoping to catch is exactly the type of unusually large market move that happened yesterday at a point in time when other traders are not thinking clearly and have unfairly punished prices along the way. Your goal is to buy at levels others believe are “impossibly low.” You’ll know you’re in the neighborhood if your friends tell you as much.

I call this “capitalizing on chaos” and it’s something you’ll hear me talk about a lot for one simple reason – days like yesterday are a great way to maximize your profit potential even if there’s more selling to come and even if you’re early to the trade.

Buy low and sell high is how the game works.

Action to Take: Enter a lowball order to buy Halliburton Co. (NYSE:HAL) at $44.50 or less. [Note: If that’s a new tactic for you, please read to the sidebar to the right for a play-by-play.]

If you are able to scoop up shares of HAL at $44.50 or less, I’d recommend a protective stop at $33.75, which represents a 32.9% margin of safety (based on the current price), and a price HAL hasn’t traded down to since December 31, 2012.

And, now, the bigger picture on this trade.

Despite a lot of talk to the contrary, oil is not going anywhere soon. There are still trillions of dollars being spent in an effort to keep the planet moving. That’s why Energy is one of our six unstoppable global trends.

Worldwide demand will increase by 31% to 119.4 million barrels a day by 2040, according to the EIA’s International Energy Outlook 2014, with the lion’s share of that coming from Asia, which is largely price insensitive given government subsidies there. So the short-term price war the Saudis are kicking off is really only to their detriment (and our benefit because of the opportunities it’s creating).

Halliburton has met or exceeded analyst estimates for the past nine straight quarters, so we’re hardly going with a fly-by-night operation here. I think the company is exceptionally well positioned to move sharply higher a year from now, even if oil remains cheap.

Speaking of which, Goldman Sachs just issued a report that every drop in price per barrel of $1 below the company’s “$84 baseline” may translate into a rise in 2015 EPS increases of about $1 a share for the average S&P 500 company. By 2016, Goldman sees that EPS increase jumps all the way to $4!

So there are plenty of broader implications to be had, not the least of which is that still further declines will be great for your other investments, too.

And, finally, despite all the teeth-gnashing, lower prices are going to quickly self-correct any supply imbalances the Saudis think they’ve got cornered. When that happens, Halliburton will be off to the races because it is the industry’s largest fracking services supplier – and it’s fracking that will be more responsive to price movements when they happen.

Best regards for great investing,

Keith

41 Responses to You Won’t Get Another Entry Point This Good for Years

  1. amos says:

    thank you

  2. David says:

    Keith,
    Thank you. Great company and great strategy. However, a limit buy at 44.50 when the stock is trading at 52.50 at 2:30pm Eastern time on 11/5/14 doesn’t make sense. The stock would have to drop 15% for that buy order to trigger. Intraday lows can get fairly low at times but getting as low as 44.50 is too big a stretch to make such a limit order ever execute, in my opinion. Wouldn’t you agree? What’s a more realistic limit price to buy at?

    • Keith says:

      Thanks for asking and for being part of the Family.

      You raise a great point. The 15% is precisely what I am looking for on this trade. That’s low enough to really provide upside and is at a level that most people think is entirely unrealistic – which to my way of thinking makes it that much more attractive.

      But, don’t think that it has to be a single day move that puts you in the game. During the course of my career, I’ve seen plenty of lowballs hung out there at “impossibly low levels” that are not hit for several days or even weeks at a time. Another Ebola scare, a Fed move, a change in policy or some geopolitical event could all cause the kind of move that we’re talking about.

      That’s another reason why I advocate a “buy list” of great companies…so that you can prepare a “portfolio” of things you’d buy – and this is the operative word – if you got the chance at the price YOU want.

      Lowballs help with that by keeping you honest, by taking emotion out of the system and by keeping you out of the game until the market comes to you on YOUR terms.

      Best regards, Keith 🙂

  3. Barry Sorkin says:

    Hi Kieth

    Bought on 8/15/2007 at $ 33.23 and reinvesting small quarterly dividends ever since so my initial 75 shares now = to 81.4764 at average cost with commision of 33.56 dividend as really didnt make its move till mid 2013, know 1 of the small reinvestments at $ 70 but some were below my intial cost to as low as $ 17 but held on against trailing stop rule, loved company and belived

    44.5 would be great rentry price to buy more if i decide to, thining it over as already nicely positioned as along the way afterwards bought BHI & SLB too so its a triple up oil service bonanza and more shares is just piling it on

    But will take your opiniuon PLEAASE GIVE ONE as 44.5 is really a great price but do u think I may become overexposed to big 3 oil service comapnies

    Thanks, Barry

    • Keith says:

      Good afternoon Barry.

      Unfortunately, it would be inappropriate for me to render individualized investment advice. That said, there are some questions you (or any investor) can ask yourself that may be helpful.

      First, are you losing sleep over the investment or otherwise uncomfortable. Regardless of what you “think” about an investment, being uncomfortable is a powerful warning sign. George Soros, for example, notes that his back hurts when he’s instinctively got a bad choice at hand.

      Second, is there serious financial harm if your investment goes south? Again, a yes is cause to rethink your premise and/or lighten up. All investments involve risk and concentrating assets can unintentionally increase that risk if not done properly.

      And, third, is adding to a given position going to take you away from your plan. For example, I advocate the 50-40-10 in the Money Map Report so a move into another position that puts recommendations out of line would not be in the best interest of higher returns. But if it’s part of a rebalancing, then it could make sense.

      Thanks for being part of the Family and for asking a very thoughtful question.

      Best regards, Keith 🙂

      • Barry Sorkin says:

        Thanks Kieth for the quick reply

        I appreciate answer, understand why u cant give individual advice, I can lose 100% of this particular portfolio and while that may hurt and cause lose of sleep I can handle a 50 % loss or more without concern

        This portfolio really has no influence on my longterm future , other more carefully controlled and professionally manged ones do, but are managed by a team with many yearly national awards and have done me well since before the turn of the century and they make sure money is preserved while providing upside, and advise me to go outside of them at times if it benefits me even if it lessens what they make

        This portfolio is of a size where $ one concern but is used primarily to help me keep my mind alive as am disabled from a very demanding profession where others lives were at stake

        Barry

        • Barry Sorkin says:

          PS- self managing some funds is a great learning experience and even if I make mistakes I know I can learn from that. Money Management was so far removed from my profession I’m disabled from so this learning as noted is a way to stimulate more brain cells

  4. Stan Berman says:

    Your tips are always worth considering. Thanks for all your help and advice.

  5. Lisa says:

    Thank you for the HAL advice. Will you follow through with advice to sell ( this includes ESKO which we purchased on your recommendation).

    Thanks again,
    Lisa

  6. Stephen says:

    Much appreciated. I’m new to you, but have been getting educated the last few years. Your explanation of this opportunity has “expert experience” written all over it! I picked up Coke for $37 earlier this year using the limit order idea you describe, and saw almost instant profits come out of it.

  7. norman says:

    If the institutional investors are reversing the stock the stock back upwards at $52, why am I placing an order entry at $45 ?? It would seem that I am guranteed to miss this “ideal” entry point not to be seen again for years.

    • Keith says:

      Hi Norman.

      That’s an excellent point. But remember, lowballs are about defining an entry point on your terms. If you’ve got different expectations, you could target HAL at a different price point. Or, perhaps, try another stock while you wait for HAL to make its move.

      One of the hardest lessons I had to learn about trading was the ability to recognize when a “good deal” was better for somebody else. Just because another trader was willing to buy didn’t mean it was ideal for me to do so.

      The takeaway for me was that the markets will always be here so there’s plenty of opportunity. The key is to define it on your terms because that’s how you will maximize returns. In that sense, you will never miss another trade because they will be according to your rule book not that of the institutional cowboys who otherwise run the rodeo.

      Thanks for being part of the family and for asking a great question!

      Best regards, Keith 🙂

    • You Bet says:

      Did your wish come true? I jumped on the HAL wagon today, one foot for now.

  8. H. Craig Bradley says:

    DEAD MAN’S CURVE

    Looks like an innovative way to compete with the “Big Boys” or institutional investors who dominate the large, quality stocks in any market. Its a way for average Joe’s like me to exploit volatility in my favor for once. I foregoed a similar buying opportunity when during our “flash correction” of -9% in mid-Oct., Alibaba briefly dipped down to $83/share upon opening one morning and then zoomed right back up from there. ( Sure have to be “quick on the draw” with our one-week or so “corrections”). Actually, I prefer to call them tremors instead.

    I thought that stocks are supposed to be like a roller coaster (ride) compared to bonds as a carousel. What do I know? On Oct. 15- Oct 16, the Ten Year Treasuries went from 101 to 104 in 24 hours, and the interest rates went from 2.3% to 1.8%. The markets freaked out at something they have been ignoring as it approaches from the other side of the Atlantic Ocean: Deflation. I think eventually, we could have a real correction catch investors by surprise ( get blindsided). It could happen anytime the cattle spook. Thunder, lightening, or Janet Yellen.

    If the bond market wakes up to the whiff of deflation again, we could see $42/share with HAL and get 100 shares at – 20% off today’s price of $52/share. Maybe it will happen and maybe it won’t. In an era of central bank QE, its pretty hard to trust an asset’s valuation. You really never know what is around the bend on “Dead Man’s Curve”.

  9. Dom Brunone says:

    Hi Keith – Thanks for the idea. Would your analysis apply similarly to Schlumberger, same industry space? Why not?

    • Keith says:

      Now you’re cooking with gas – pardon the pun. You bet it would.

      And that’s a very interesting point. Lowballs open up an entirely new way of thinking and one that can be used on any stock at any time because it helps you prepare ahead of time…long before other investors panic and act irrationally.

      Thanks for being part of the Family.

      Best regards, Keith 🙂

  10. H. Craig Bradley says:

    One more thought ( actually two more):

    First, when Ben Bernanke first uttered the word “Taper” in May 2013, do you remember the response by the stock and bond markets? Well, 10-year Treasury bonds soon went from 1.6% to 2.3% by July 2013, then all the way up to 3.2% by year end, then trended down, more or less till today. Stocks went down at the same time that month and in August, as well.

    My point is both are related to instability in the bond markets then and now, and seemingly related to movements in the FX market ( U.S. Dollar Index). Once you have three independent variables playing-off each other you not only have enhanced volatility, but much more complexity through a higher number of possible outcomes (statistically).

    The second point is the time of Black October on Oct. 19, 1987 when the stock market crashed, a friend in Portland was in the process of closing on a house. The interest rate had not yet been locked-in by the bank. The rate jumped 1% that day. So, volatility in the 30 year interest market channeled straight into the housing and real estate markets in real time. It could happen again.

    These market relationships give me an “itchy feeling in my back” ( unease) . Accordingly, stock and bond markets are not entirely safe. We don’t have a mature bull market and real economic recovery; instead we have a “fake” one. Fake or not, its still the only game in town. That’s potentially a big problem for everyone when the game changes one day.

  11. Godfrey Anderson says:

    HERO ? TAKE-OVER target at this price ?

  12. HYMN says:

    I dislike anything Cheney, I loathe fracking. However, I like making money. I liked the piece and your advise and reasons for it. It’s just I’m not that smart or sophisticated. Republicans are in the majority,they love fracking ( a losing propisition so far) and Cheney is their boy, so as usual wit dis guy he’ll make money. Imagine getting paid to dump his toxic waste in a hole, no one’s the wiser, no pain in the neck EPA,no permits,no Hazmat feaseability study,just dump.If the EPA begins to get wise,the republicans will do away with it,at Cheneys request or hint. Hell yes Hail its no burden, all the way. Hell with the planet,just make money.

  13. Rey Hollins says:

    I bought it the day b4 at 51.19. I thought it was oversold & has good fundamentals going forward. I wish I could have picked it up near $50.

  14. H. Craig Bradley says:

    THE ONE THAT GOT AWAY ?

    Sometimes in life you get what you want and sometimes you don’t. NOBODY wins them all. Probably more trades will disappoint than not. All you need do is bat 300 ( successful on 1/3 of your trades in the long run). Remember, most of the predator species ( cougars, lions, wolves, hawks, falcons, etc. ) in nature are unsuccessful in most attempts to catch a meal from a prey species. There are long periods of hungry nights, so predators are perennially hungry. Its another instance of “feast or famine” for predators in the Wild Kingdom. It can be that way sometimes for investors too. Just wait for the right opportunity ( for you) and pounce on it.

    Markets are coy, markets are capricious, markets are always fickle. So, just remember, nobody can make you do anything that you don’t like or that is not advantageous or good for you. Nobody takes care of you like-you. You don’t have to please anyone and you sure will never please the market, as its agnostic to your concerns. Markets have a mind of their own. Markets can not be tamed or controlled by U.S. BANKERS or Federal Bureaucrats and Politicians for long. They upend the expectations of many over and over again.

    A little Wildlife Joke for you all:

    Q: What do you call a mountain biker riding down a trail or dirt road in the mountains or foothills in lion country?

    Answer: MEALS ON WHEELS.

  15. Ben Thebaut says:

    Is it OK to enter multiple lowball orders when convenient, at the risk of forewarning the market, or better to keep your list private, at the risk of missing on the timing?
    Thanks.
    Ben

  16. Ben Thebaut says:

    When are fixed “stop orders” preferable to “trailing stops”?
    Ben

  17. Dale says:

    Wouldn’t selling a put at $45 be a good strategy? That way you collect a premium whether or not the lowball price is reached.

  18. William Bricking says:

    Keith,

    How do you feel about selling put options on HAL ?

  19. Peter Gilbody says:

    Kieth,

    How about some suggestion on trading options on HAL. This has been a good strategy on other stocks but would like to hear your guidance on this approach

  20. Joe Hughes says:

    Buying at low ball prices, was well done. I fear I get more advice than I can properly install? Any suggestions on that front?

  21. Joe Hughes says:

    None.

  22. Mile says:

    Hi Keith,

    Thank you very much for you advise and recommendations. I am extremely delighted to be a part of the team. I would never find an EKSO without your publication.

    Mils

  23. Barry says:

    Hi Kieth,

    In light of the BHI buyout is this still a poper play ort should the low v ball # go even lower

    Thanks

    Barry

  24. H. Craig Bradley says:

    BLACK FRIDAY SALE

    Halliburton went on sale this Friday at opening Nov. 28 right out of the gate. It plunged to $41.88, then rose back to $42.09. I took your advice back on Nov. 5 and put a limit order in for 100 shares at $42.00 It was my lucky number at the “Betting Parlor” today- a pleasant Holiday treat. OPEC handed investors a second opportunity today by keeping production quotas ” as is “. The market reacted with a vengeance. I suspect it could go even lower, maybe down to $35.0 or $36 a share, depending on the price of oil early in 2015. Those were HAL’s prices back in Dec. 2012. Here is my take going forward:

    My gut tells me this is not yet a bottom this time around. Why? For one thing, there is the “J” formation, but no “hook” of corresponding increasing price and volume at this time. HAL just flat-lined at $42.00/share and there is simply little volume following along. Plus, I think oil can go lower this Winter, maybe as low as $50.0/barrel. Why? Because most of the large oil shale developments such as the Bakken Shale in North Dakota are profitable even with oil as low as $50/barrel.

    So, about the ONLY way the Saudi’s can really stunt further development of domestic oil and gas resources is at a very sustained low price. Furthermore, they have to hope it can be kept real low long enough to cause closure of existing oil wells. Of course, there won’t be much new development at $69.0/barrel either, but existing wells are still in the black. A true price war takes more time to win. The Saudi’s are looking farther out than the market or the traders. In fact, in a few years, they might again have us “over a barrel”. I especially get suspicious when seeing articles titled: ” The Death of OPEC ?”.

  25. Blind Guide says:

    HAL Jan. 2 range: $38.97-39.94
    With the 12/12/14 ‘single-bottom plow’ below $38, presumably all you who put in your less-than $44.50 orders have been ‘filled’ leaving the field wide open for my low-ball GTC limit order of $35. Since there has been no ‘double-bottom – nothing more than a dead-cat-bounce just over $40 with down-trending sideways activity afterward – I fully expect a fill at my -30% price …so much for the disbelievers in Keith’s 15% low-ball methodology…LOL!

  26. Laurel Gregorian says:

    Could we sell a put on HAL at about 44-46? We could make some money and or maybe get the stock?

  27. M. Hadfield says:

    Why not use a call Option on this play if you think the cost of the premium+stock price will be lower than where the stock will be in a year or so? This way you risk less capital if theirs a hit to market in these uncertain times?

  28. John Barea says:

    Thanks Keith for the info. I put in a limit order with Fidelity for 44.50, the exact amount you suggested. Wasn’t bravery on my part since I just now read your suggestion on buying HAL on Sunday, 3-29-15 and HAL closed Friday at 44.24 or some where very close to that. Please keep us updated on when to sell this one. As always I enjoy hearing from you because you make so much sense!!!
    Best regards,
    John Barea

  29. Paul Davey says:

    Keith, I think you are a genius but I have one concern with low-balling in the current environment. If the big “reset” hits ie market drops say 50%, you could get caught with shares at $44.50 you could buy later that week for $20. Your thoughts? Thanks Paul – Australia

  30. Tom Hollarn says:

    Keith, I just signed up a couple of weeks ago and am trying to find my way around. I enjoyed read the passed history, but I have been looking for a “score board.” What’s still open, if so, at what price, what has been sold, what have been the percentages/ time. Can you direct me to the start point? Thanks so much…

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