I think we still haven't seen the real stress in the system and we still are reacting only to the bounce in the gross domestic product.
To me, if you want to buy, you go with total quality. In the service side you buy Schlumberger (SLB) . In the oil side you buy Royal Dutch (RDS.A) with that terrific dividend. In the MLP space I would buy Enterprise Product Partners (EPD) , the dean of the group. And in the natural gas side I would buy Cabot Oil & Gas (COG) but I would be real careful because I have very little hope near term for natural gas. I understand the desire to buy these and said in my previous piece that people are taking the plunge. But if you put on a full position here, you could get hurt on any quick dip in the futures because these stocks are up hugely from their lows.
I would not pick up any of the ones that are in trouble on their cash flow and need oil to explode back up. I wouldn't be interested in the companies that you hope would get a takeover. And I would wait for EOG (EOG) , the best independent, to come in because it has had such a run.
Why the caution? Because today the gross domestic product is ringing in our ears as something good.
On Tuesday, with inventories, we might have a high number and the chatter starts all over again. We forget the strong economy and we focus on excess supply.
Now, how about the other group that is still in freefall -- the biotechs?
I like Isis (ISIS) and I like Celgene (CELG) because they have been hammered and they both have products that aren't about to get the Express Scripts (ESRX) treatment. But I think that Express Scripts has had enough of a run and I would rather own Cigna (CI) or UnitedHealth (UNH) . Again, no hurry, but they are down and if we get some lower number we will wish we had bought.
Oil is too high, biotech is not low enough. So, start positions and then wait.
It's the best way to play them.