"National Oilwell Varco (NYSE: NOV), a buy in our 'Wildcatters portfolio,' will see an outsized benefit from improving conditions in the global oil market," says Elliott Gue in The Energy Strategist.

"Rig technology is the crown jewel of National Oilwell's business; the unit builds key equipment used on land and offshore drilling rigs.

"The unit is currently benefiting from the boom in deepwater drilling activity -- one of the only drilling markets that continue to see growth.

"Equipment used on deepwater drilling rigs is far more complex and expensive than that used on land or shallow-water rigs. As a result, selling equipment into the deepwater market carries far higher profit margins for National.

"We sense a turn for the better coming in the oil sector," says Peter Way who tracks 'big money' investors for his Block Trader Oil & Gas Report. Here's his look at the "big block" traders.

"When we use the hedging analysis employed in our stock price forecasts, there are significant differences between some adjacent futures expirations. Here's the current picture:

"Front month (November) hedging suggests likely near-term higher prices. But the December contracts are likely to continue the past 3-month price decline – briefly.

"After that we could see crude rise over a few months into the $115-125 area or even higher, providing a bullish backdrop for most energy stocks. We sense a turn for the better coming in this sector.

"Several issues are selling at attractive prices now. Among major integrated producers, the standout prospect among the big oils is Petrochina (NYSE: PTR).

TheStreet.com's Jim Cramer says the oil stocks' decline yesterday was exacerbated by a hedge fund's collapse.

"I think the collapse in the commodity stocks shows a worldwide recession."

"The decline in oil and oil service stocks, far more severe than the decline in the commodity, bodes for $80 oil and gas."

"Without a hurricane hitting rigs, the companies involved in the servicing and maintaining rigs will have severe earnings declines, at least according to their stocks."

These are three perfectly acceptable analyses of the action in the Oil Services HOLDRs (AMEX: OIH) (Cramer's Take) and in the oils in general yesterday in light of Gustav's failure to do any real damage and a continued expectation that economies around the world are slowing.

It's just that they are false takeaways. The single most material issue for the stocks -- not the companies -- was the collapse of Ospraie Management, which blew up and got blown out and took a ton of stocks down with it. The fact that this market is thin, that lots of players clearly knew this blowup was coming, and that the fund was no doubt leveraged up the wazoo (as all desperate managers tend to be) exacerbated the declines perhaps two- or threefold.

TheStreet.com's Jim Cramer says there's a big disconnect between the trade, orchestrated by the funds, and the real-world demand.

How can anyone actually own oil or natural gas through this relentless assault on price? I know when it was going up, the talk was that all of these new funds were indexing trillions to commodities and it was just going to stay there, and that's why there was a new level of oil demand.

Can those same accounts come in every day and take this relentless pasting no matter what the news? And do they believe the news, that they are losing money today because some storm went to Daytona and not to New Orleans?

Yesterday, I had Jim Hackett, the CEO of Anadarko Pete (NYSE: APC) (Cramer's Take) on "Mad Money at the Half," and he was flabbergasted at the activity in the futures pit and how unrealistic it has become. He's focused on natural gas, where he says the demand at $8 by industry -- the glass makers and chemical companies and steel and aluminum users -- is voracious. But the futures themselves just keep going down, regardless of the demand.

It has been a rocky year for Wall Street, but even amid the uncertain market conditions there are some companies that are playing with a lot of cash. In addition, they know how to wisely use their funds, which makes them strong enough to beat any challenge.

One important factor that determines the stability of a company is its corporate cash flow. CNNMoney is looking at stocks with both healthy cash flow and a surplus of cash, which helps them avoid tough situations where they may need to raise their capital (check out its slideshow of these five picks). Another element that CNNMoney takes into account when picking companies is their ability to reinvest cash in ways that assure them a nice profitability.

Let's look at some of the companies that CNNMoney likes:

"Value stocks are those whose prices are relatively low compared to their fundamental value, as measured by factors such as earnings and net worth," notes Mark Hulbert.

"Value stocks can be considered all-season stocks, as history shows that they can perform well in both up and down markets." Here, the editor of The Hulbert Financial Digest also offers a list of value stocks that recommended by the most advisors who have also beaten the broad market over the last decade on a risk-adjusted basis.

"Value stocks are to be distinguished from so-called growth stocks, which have relatively high price-to-earnings and price-to-book ratios.

"Consider first how value stocks perform during bear markets. Believe it or not, they on average actually tend to make money. It's not only that they lose less money than the overall market, they actually gain.

"Take the 2000-2002 bear market, for example, during which the overall stock market declined by 48.6% (as measured by the dividend-adjusted version of the Dow Jones Wilshire 5000 index (97199001:Dow Jones Wilshire 5000 Composite Index

"In contrast, according to data compiled by University of Chicago finance professor Eugene Fama and Dartmouth University finance professor Kenneth French, the average value stock over this time gained over 80%.

CNN/Money is good enough to put out the top performing stocks of 2007 list. Most of the companies are fairly familiar, but leading the pack for the S&P 500 is National Oilwell Varco (NYSE: NOV), a stock almost no one has heard of.

The company has been in the right place at the right time. It makes equipment for the oil and gas exploration industry. With the global need for energy rising, NOV is a near-perfect investment.

The firm is not only growing due to a strong industry environment. It is also making what Wall Street thinks are some smart acquisitions. It announced it would buy oilfield service company Grant Prideco (NYSE: GRP) for $7.4 billion in cash and stock. Because the companies are in similar fields, chances are the duplicate costs can be taken out to improve operating margins.

In the September quarter, NOV net income doubled to $366 million, which beat analyst estimates. Backlog for its products also hit a record.

But, the success of National Oilwell Varco points out that in the market, it is better to be lucky than good. The odds that the company could have done so well if oil were at $30 a barrel are probably low. The demand for exploration would be substantially less. The need for drilling equipment would be modest.

National Oilwell Varco had a great year. If oil prices move down, Wall Street should not count on it again.

Douglas A. McIntyre is an editor at 247wallst.com.

Technician Michael Ashbaugh expects a "cooling off period" before stocks again test their all-time highs. Yet, he remains bullish, with a particular focus on the oil services sector. In his MarketWatch Technical Indicator he explains, "The Dow was recently trading 206 points from all-time highs while the S&P 500 was 26 points from all-time highs."

He suggests, "Looking ahead, that's where the tension rests. The U.S. markets are facing significant resistance at record highs, and are extended near-term after a massive two-day spike. That means a cooling off period is likely due before they make a legitimate run at record territory."

Regardless of any short-term pullback, he adds, "The market's recent decisive break atop the 50-day moving average is distinctly bullish. The U.S. markets also confirmed their uptrend with a 24-to-1 positive volume session last Tuesday, meaning the longer-term path of least resistance is higher."

Meanwhile, one of his favored sectors, based on their technical positions, is the oil services stocks. He explains, "The Oil Services Index remains among the strongest sectors. We have selected several names to highlight as they are well positioned technically. And, their relative strength makes them better bets longer-term."

The advisor points to Weatherford International (NYSE: WFT); Cameron International (NYSE: CAM); Schlumberger (NYSE: SLB); National Oilwell Varco (NYSE: NOV); and FMC Technologies (NYSE: FTI).

Each day, Steven Halpern's TheStockAdvisors.com features the latest stock picks and investment ideas from the nation's leading financial newsletter advisors.

National Oilwell Varco (NYSE: NOV) volatility elevated as NOV at record high on oil rally.

NOV, a worldwide provider of equipment a components used in oil and gas drilling production operations, closed at record high of $136.94. WTI Crude oil futures are down 0.03% at $78.21 a barrel according to Bloomberg. NOV overall option implied volatility of 43 is above its 26-week average of 38 according to Track Data, suggesting larger price risk.

Texas Instruments (NYSE: TXN) volatility at 30 into third quarter business outlook.

TXN closed at $35.72. ThinkEquity says that "TXN provided an in-line mid-quarter update." ThinkEquity goes on to say, "we view this as mildly disappointing given the strong environment for PCs, consumer, and high performance analog, and investor expectations for an in-line to slightly better outlook." TXN September option implied volatility of 30 is above its 26-week average of 27 according to Track Data, suggesting slightly larger price fluctuations.

Daily options Update is provided by Stock Specialist Paul Foster of theflyonthewall.com.