Sector Trends: Oil & Gas

• Ian Wyatt
• On 5:15 pm EDT, Thursday October 8, 2009

Two more IPOs hit the market today. Mistras Group (NYSE: MG) opened at $12.30 a share and made a little headway. The company provides technology-enabled solutions that evaluate critical energy, industrial and public infrastructure. This is interesting, especially since we expect government stimulus spending on infrastructure to pick up next year.

The other IPO was biotech Omeris (Nasdaq: OMER). It opened at $10 a share and quickly dropped 10%. I can't say I'm surprised. Biotechs move on news. And the bigger biotechs with products on the market, like Celgene (NYSE:CELG), Amgen (Nasdaq:AMGN) and even Gilead Sciences (Nasdaq:GILD), will follow the general trend. Small biotechs are a crapshoot.

Our old friend Tri-Valley (AMEX:TIV - News) was back on the Top Gainers list with a 13% gain. There was no news to account for the move, so I suspect it was related to the technical bull flag pattern we noted on the chart in the September 30 issue of SmallCapInvestor Daily.

As you can see, the second bull flag formation (which began with the volume spike on September 28) established support at $2.50 and is now trying to resolve with a breakout over $3. I expect a close above $3 will lead to more gains tomorrow. Tri-Valley traded above $6 for most of 2008, so there could be some significant upside here. 

The other bull flag we looked at on September 30 was for biotech Opexa Therapeutics (NasdaqCM:OPXA - News). This stock has not yet staged a breakout move as the bull flag resolves, but a move should be coming soon.

 

  As you can see, the price is squeezing down onto support at $3. It has to break either up or down sometime soon. 

In the September 30 edition of SmallCapInvestor Daily, we also noted the sector trend of small oil & gas companies that are making big gains. One of my Top Gainers rules for finding good stocks is to pay attention to sector trends. When you see several stocks from the same sector hitting the Top Gainers list, it can be a sign that there is strong buying pressure across the group.  

And now, we're seeing American Oil & Gas (AMEX:AEZ - News) make a repeat appearance on the Top Gainers list with a 15% move higher today. American Oil & Gas closed at $1.97 when we first discussed it. Today, it's a $2.60 stock.

Let's see if Rexx Energy (NasdaqGM:REXX - News), or Pioneer Drilling (AMEX:PDC - News), also from September 30, followed up with a Top Gainers list appearance. Not bad, today they are up 4% and 6%, respectively.

In light of yesterday's observation that retail might be seeing some upside, it was nice to see the headlines that many retail stores are showing better sales numbers. Coincidence? I don't think so. Investors are smart, and their buying trends will often show up before news does.

It's also interesting to see Liz Claiborne (NYSE:LIZ) up 28% today. Liz Claiborne is out of its exclusive deal with Macy's (NYSE:M - News) and into one with J.C. Penney (NYSE:JCP). The CEO of Liz Claiborne said the deal was about "…winning with winners." I'm not sure what exactly that means, but analysts seem to think that the Liz Claiborne line will do better at Penney's than it did with Macy's, largely because Penney will be in charge of sourcing and production.

Liz Claiborne's stock has run from a $4.48 open on October 2, to a $6.89 high today. That's a pretty nice move of over 50%. And it shows that investors anticipated this news regarding Penney's. So I'd expect to see some profit-taking over the next day or two. But this could be a good one to buy on a dip.

And finally, so you know, Vonage (NYSE:VG - News) is down 13% today. I knew I hated that stock.

Ian Wyatt is the Chief Investment Strategist of SmallCapInvestor PRO (http://pro.smallcapinvestor.com) and author of the book, "The Small-Cap Investor: Secrets to Winning Big with Small-Cap Stocks." You can learn more about his book at http://www.smallcapbook.com.

Buzz up!