The back story is straightforward. While Egypt itself is not a major producer of oil, the country is a critical chokepoint for oil transit by virtue of its geography—because it sits on top of the Suez Canal and the SuMed pipeline.
I wrote about this in reference to a BlackRock research memo earlier in the week.
In consequence there was—not surprisingly—downward price pressure on stocks with perceived exposure.
One example of a stock that dropped on the dismal news coming out of Cairo is Apache.
Apache lost about 14 percent of its market cap in ten days amid relatively high volume.
Yesterday, however, Morgan Stanley upgraded Apache from equal-weight to overweight and increased its price target to $145 despite the stock plunging below the $120 mark earlier in the week.
What's more, the Morgan Stanley research report cites "Recent negative headlines out of Egypt (political unrest)" as being among the reasons to buy now.
Perhaps one of the research report headlines puts it most succintly: "Buy the Dips"
If you have the stomach for it now may be a brilliant time to buy what the markets have oversold.
Unless, of course, things go catastrophically wrong.
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