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Jim (cont'd):        What do the technicals say about RIG… Dan Fitzpatrick, my colleague at TheStreet.com, where I am chairman and best looking guy, even though I have an skin outbreak on my birthday…. he is a great technical analyst who looks at charts every day… he thinks that Trans Ocean charts looks bullish… bear with me… in mid December, there was a high volume selling climax… see that is a volume spike… that is called a selling climax… its not nearly as steamy as it sounds… it just means that most of the people that wanted to sell Transocean did… since its low on December 24th RIG is now up 40%… I know this doesn’t look like 40% that is part of the problem when you have a longer term short… this 40% increase by the way is better than a sharp stick in the eye… should we just say that we have missed the move… the train has left the station… time to find another one to get on board… I am often tempted to feel that way… because I feel like wait a second I didn’t catch the bottom… what is the point… not the chart watchers… RIG has started to have a series of higher highs… let me show you those… higher highs… down… then higher… that is a pattern… which according to technicians means that buyers are becoming more aggressive… they want to own this stock badly… sellers are much less anxious to sell… by the way, this stock held up well today… in part because of this pattern.

Now recently RIG broke above its 50 day moving average… and that would be going like this… 50 day moving average is another technical term that tracks how close a stock has hugged its short term trajectory… then RIG pulled back to or what is know as tested… to move the chart speak… its moving average… and bounced back to an even higher price… I am giving you all this stuff, you have to know this stuff… that means the bulls are firmly in charge of this stock… it now has a base that looks like a reverse head and shoulders… that is the ticket… even a fundamentalist, not a mentalist, because I am sick of the guy the Mentalist, I mean like CBS thinks that we are interested in him… anyway, Cramer sees this incredibly bullish pattern that is the inverse of the dreaded head and shoulders… when you see this pattern it is supposed to indicate that that is down… if you forget this, remember Head & Shoulders… dandruff, bad, right… technicals I am trying to get everybody involved.

So, should you buy it… if you go by what the chartists tell you… they say it is a buy right here but if it drops below $53... see this is how they work… if it drops down below here… what does that do for me… I mean this market is horrible… it can get below $53 just because Geithner sneezes… anyway, that is why we don’t go by the charts… we look at the fundamentals… on that basis I like RIG on the fundamentals… but I think you can do better… when Transocean was my biggest winner in the charitable trust I rode it up to the mid $100’s on the strength of ever increasing day rates… not chart mumbo jumbo… that is how much they get charged for deep water drilling rigs… when it bought Global Santa Fe, a deal that was announced in July of 2007, closed that November… soon after the CEO, by the way, came on the show and said that his company was too darn cheap… Transocean became the unassailable king of deep water drilling… and those day rates zoomed from $400,000 to $700,000... you rent a rig it costs $700,000 a day.. these are long term contracts…. and the company just told Bloomberg.com that there are no cancellations from any of the major firms… but to me Transocean feels like a drug company… that has lots of drugs going off of patent in 2012... that is when the contracts roll over.

The company can’t get the rates what it was charging when oil was 2 or 3 times as expensive as it is now… so in the out years it will be making less money… not more… that said… the stock trades at an unbelievable cheap 4 times earnings… remember the average stock is selling about 15 time earnings… I think it has spent enough time in the penalty box having fallen from $163 to $59... because the only place that there is surplus oil is in deep water… and you need these guys to drill… Petroleo Brasileiro (PBR), the big Brazilian oil company, is still committed to drilling thru this down turn… but not many others are… so I think when the leases roll over… I think Transocean will get hit with number cuts.

So what do I want to do… I want to play the bottom of crude a different way… the possibility… for driller respective… the possibility that oil goes higher thanks to the demand from veracious communist Chinese… I don’t know… Transocean is too specialized… it is rigs… that is it… kind of like a bio company with one big drug… so do extend the pharm analogy what we are really looking for is an oil service play that looks like a big drug company with lots of different products… they are constantly with new stuff… there is a lot of Phase III stuff..

And that means we want Schlumberger (SLB)… universally known as slob… SLB… but I call it Schlumburger, like hamburger, because I did it once at a big Goldman Sachs meeting and I never lived it down… Schlumburger is the most consistent and revered in the group… and while its multiple is more than twice Transocean… it is also most more in control of its destiny… with a global presence that is forever reinventing itself… historically much more dependent… see it is as beautiful a chart… it is just not a beautiful a chart… it doesn’t have that fabulous reverse head and shoulders pattern that the traders like… oil does not have to go to a $100 though to keep the momentum going… indeed RIG is a momentum stock… but Schlumberger is more like Bristol-Myers or Eli Lilly… rather than a one hit bio tech name or a momentum play… but that is okay… if you want to look closer to home in the oil complex… RIG is like a wildcatter… and Schlumberger is more like Exxon… by the way, when I was at the trading desk… I always find these analogies to be incredibly worthwhile and helping… even if they are SAT like… either of these stocks work if you think that oil has bottomed and is heading higher… as their share price right now reflects $35 oil… and oil went on to $37... they will go down if crude pierces $35... but since I don’t think that will happen… I think they will either be dead in the water or go higher… so that is a good risk reward… I think RIG will go higher than SLB if oil goes up… but if I am wrong and oil plummets RIG will rip your heart out… just like the high priest of Callie in “Indiana Jones and the Temple of Doom”… I just like the risk reward better for Schlumberger… because it is not dependent on one line of business the way RIG is… plus Michael Ghoul, slobs excellent CEO took the estimates down so low in its last conference call… that it could be UPOD…. under promised over delivered... territory… someone tell Geithner about UPOD… I have been negative on the group because of this negativity… but now that I believe oil has bottomed… because I think China has bottomed… I am on board.

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