1/6/05 --

SFL is setting up to go through its near-term downtrend. It bounced off solid support at 18.5. Moneyflow shows SFL is now rebounding from an oversold condition. While SFL was falling, sell volume never swamped buy volume. The only negative I see onthe chart is that the uptrend from the spinoff is broken. A good short-term trade would be to buy a rise through the downtrend with a stop loss back underneath it. Nar term targets would be the next downtrend line at 22, then resistances at 24 and 26. This is a low risk trade for 10% in a few days.

On the fundamental side, I understand SFL has locked in minimum rates with FRO over the long-term, while it also gets 20% of the difference between its contracts and spot rates. So, downside risk to the 9% dividend is minimal, with possible upside.

If I had the free cash, I would buy some using the strategy outlined above.