24
Aug

Friday – Gas Review + Stocks We Care About Update

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Dean vs Pemex Watch: According to Reuters, two of three Gulf  side export points are operations and Pemex expects production in the Gulf to be back to 80% of normal by early next week. They also indicated they have 10.5 million barrels in storage on hand and tankers have already loaded and set sail from the two open ports. Damage to platforms was assessed as minor. Comment: I'd expect a bigger draw in crude next week as we essentially lost a majority of Mexico's exports this week to the tune of 1.7 mm bopd.

Pemex Watch: Here's a new field for you peak oil types to learn to pronounce: Chicontepec. Think Cantarell offset...though not until 2014 but it does go to show you that just when you think you're at that peak (yet again) you're not. Pemex thinks the field, at last report producing 23,000 bopd will increase to 470,000 bopd over the next 7 years. 

OPEC Watch: Cheat, cheat, cheat. According to tanker tracker Oil Movements, OPEC deliveries are set to rise 610,000 bopd in the 4 weeks ended September 8. Oil Movements went on to say that roughly 2/3 of the increase would be headed to the U.S. with the balance going to Asia. Comment: so there's no need to hike quotas at the September meeting. One other thing, you can't have this kind of boost without the Saudis.

 

Stocks We Care About On A Boring Friday in August:

  • (NFX) - still languishing and our strike is too high in the current environment. No change to my liking of the story but I'm close to taking on the September $45 and punting the $50s.
  • (SWN) - ditto the above comments except here we're looking at the $40s. All this over a lot of bad home loans and the prospect of 2 million home foreclosures in the next 6 months? If anything those empty new homes are the most efficient in the population meaning those displaced poor souls who took on interest only mortgages will now be paying more to stay warm as they consume more gas in HUD housing
  • (APC) - content with my $50 calls.
  • (RIG) - should have bought more. The latest MMS lease sale was the most deepwater focused yet. Minor fluctuations in the price of crude and natural gas have little impact on the long range plans of the E&P and Majors who are moving to deeper and deeper water. Business really couldn't be better here and the pending merger with (GSF) only reinforces their leverage on long term contract rates. Some of the rigs out to 2010 are looking at the half million $ a day mark...just sick but if you gotta have it you gotta have it!
  • (HAL) - Cramer's wrong. Improving fundamentals + the dirt cheap valuation (---x 2008 levels) + a hefty back say so. Also, I think gas is due a late Summer / early Fall rally or at worst a stabilization. 
  • (TSO) / (VLO) - Doing well after my entry into calls 2 days ago. This falls into the enough is enough category. The stocks have been bashed since my negative call on the group July 12. Though gasoline got some support this week from a dearth of imports and "high demand" attention will soon shift to heating oil and, as many have already noticed, low levels on the high sulfur end of things. While some of this is legislated, some is due to balls to the wall production of gasoline in lieu of HO. Winter is only 3 months away.  

 

Natural Gas Review: What follows is the normal review charts of the numbers. I would add that this week's slightly smaller than expected injection was important for three reasons:

1) it produced draws in the western and producing regions demonstrating that heat does still matter despite the high volume growth being displayed in both regions,

2) it came after a massive Dean-disappointment downdraft in natural gas prices and was low enough to keep prices (at least yesterday) from plummeting still further despite talking heads who blithely claimed that traders were planning to sell whatever number was reported, and

3)  with weather predicted to remain warmer than normal, it flies in the face of last year's numbers in advance of a rising tide of big injection numbers seen in the last half of August and September last year. This means that we could easily transition back to YoY deficit in the next 3 to 4 weeks which should lend support to gas. (of course, imports could wreck that theory but so far, so good). The year ago comparisons for the next 4 weeks are as follows in Bcf:  48, 71, 108, and 93.

On to the charts 

Week Ended August 17, 2007: 23 Bcf Injection.

Gas Inventories Are Now 13% Above The Five Year Average, and 2% Above Last Year's Record Levels.

  • Storage as of August 17, 2007: 2,926 Bcf (updated August 23, 2007).
  • Max storage for this week in history: 2,857 Bcf (2006).
  • We are now 2% (77 Bcf) higher than year ago levels, down from 4% two weeks ago.
  • We remain 13% (333 Bcf) above the 5 year average which includes 2006's record levels (see third chart below).

Looking Ahead: 3.5 Tcf here we come. This is old news.

 

gas-table-082307.jpg


As you can see in the table, average injections from now through the end of the traditional injection season get us to "high" levels of storage. Even the minimum level of injections, which occurred last year and is therefore in both the 3 and 10 year scenarios gets us to a lofty 3.5 Tcf which by historic standards is more than "full".

Where we are now:

gas-graphs-082307.jpg

 

 


Odds & Ends

Analyst Watch: All quiet on the analyst front.

 If I don't see you in the comment section have a great weekend!

 

121 Responses to “Friday – Gas Review + Stocks We Care About Update”

  1. 1
    Stephen Says:

    The good news on the RIG/GSF merger and the good news on NFX’s 2Q results, have rather been overlooked in the turmoil.

    I agree that NFX under $44 and GSF under $66 look like real bargains. Also because of the cash dividend in GSF (also RIG) of $22.46 upon merger, any drop in GSF is further leveraged, the move from the high of $78 to $69 now, is actually a move from $56 to $47.

  2. 2
    jimbo Says:

    Drybulk list refresh:
    BHO DAC DRYS DSX EGLE ESEA EXM GNK KEX NM QMAR TBSI
    By my research there 15 publicly traded drybulk. Have only found 12. Anymore out there? (DAC is both container and drybulk shipper)

  3. 3
    ndog Says:

    z – do you set upper and lower stop limits for your options? do you have a general rule on the percentage gain or loss?

  4. 4
    zman Says:

    Ndog – in general no I don’t unless I’m protecting profits or I’m starting out deep in the money. I probably need to get better about stop discipline but I’ve found them to shake me out of positions too quickly on NTM options. as far as a general rule I hate losses but often a what seems like a shattered position can come back to life in a matter of days or hours so I try not to sweat the misses and instead look at the portfolio as a whole. Ask me again sometime after the close…this is a mindset thing and not a hard and fast rule thing for me.

  5. 5
    zman Says:

    should have included CHK, CRK, and HK in the NFX/SWN comments this morning. Excellent 2Q results cast aside over home loans/slowing economy worries.

  6. 6
    zman Says:

    Probably good news for CEO, SNP, PTR in terms of local pricing power:

    headline from DJ: China imports 1st gasoline cargo to meet domestic shortage.

  7. 7
    zman Says:

    Rig running up to its 50 day average at $105.50.

    Refiners strong again this morning. Nicky sorry to ask what are your resistance levels on HO and RB?

  8. 8
    zman Says:

    hello, anyone home today. Stocks are having a great one but I guess it’s August and no one cares.

  9. 9
    scoop006 Says:

    Z-“MMS” lease stands for Master??

  10. 10
    mdinh Says:

    I am home, I care, but I am scare.

    my TSO@50 is getting some life.

    The funds really sold the crap out of this one. Hope they all start buying back soon.

  11. 11
    DrT Says:

    I’d stop a little short of saying “great one” yet but I like the trend. A lot of ground to make up.:>

  12. 12
    Sambone Says:

    Z – I’m here. Just sitting on cash. Bght some SKF yesterday. Don’t think this thing is over yet. Reminds me of 87.

  13. 13
    zman Says:

    Minerals Management Service, dept of the interior. They held lease sale #204 on Wednesday. $290mm in high bids. Pretty substantial interest, especially in the deepwater.

    Thanks for the replies and apologies for sounding a bit cranky. Thought the sight was broken with all the lack of chatter.

  14. 14
    scoop006 Says:

    Thanks for the explanation.Didn’t sound cranky to me.

  15. 15
    zman Says:

    Oh trust, me I’m cranky. Market goes down a few percent and we’re in panic mode which yielded a disproportionate hit to the energy sectors which are doing fine and will continue to do fine unless we role into recession which we’re not.

    It also ticks me off that those mortgage punks like the CEO of country wide have the audacity to screw up so bad and then say they’re ticked because an analyst “mentioned the possibility of bankruptcy”. Dude, you’re the one who made the crappy loans. You’re the one who took out and used a $11.5B credit line in a day. Live with it. Maybe you will go bankrupt maybe not. One thing that’s almost certain is that you won’t have learned your lesson from this experience. Now you can be mad at me!

  16. 16
    Sambone Says:

    Z – What makes me laugh is that the Wallstreet suits are moaning about their bonus checks. Their the ones that got us in this big mess, get Cramer on TV pounding the table that people are losing money, etc., etc., and so on. Can’t blame you for being cranky.

  17. 17
    andy Says:

    he’s the same guy who sold millions of $ of his personal stock at much higher prices recently

  18. 18
    scoop006 Says:

    Now you sound cranky

  19. 19
    zman Says:

    firesale at RIG all of a sudden…don’t see anything…maybe somebody just decided enough quick gain was enough quick gain.

    yeah, I used to moan about my bonus too (especially when it didn’t come until Feb instead of the promised mid Jan) and they’ve gotten a lot bigger since I left so boo-hoo for them.

    don’t get me started on Cramer.

  20. 20
    Sambone Says:

    Nymex Crude Up Over $1, Lifted By Gasoline

    By HYUN YOUNG LEE
    Of DOW JONES NEWSWIRES

    OTTAWA — Nymex crude prices climbed more than $1 a barrel, dragged higher by strong gains in the gasoline market.

    “There’s some buying on the gasoline contracts because of the strong drawdown” in Wednesday inventory data, when gasoline stocks posted a surprise 5.7 million barrel draw, said Eric Wittenauer, energy analyst at A.G. Edwards.

    The front-month October light, sweet crude contract on the New York Mercantile Exchange was up $1.01, or 1.45%, at $70.84 a barrel, after climbing to a high of $71.05 a barrel. Brent crude on the ICE futures exchange rose 72c to $70.58 a barrel.

    Front-month September reformulated gasoline blendstock, or RBOB, was up 4.73 cents to $1.9705 a gallon. September heating oil was 2.49 cents higher at $1.9859 a gallon.

    Traders are also booking profits off Wednesday’s settlement levels, when Nymex crude sank to an eight-week low of $69.26 a barrel, Wittenauer added.

    Renewed confidence that the recent credit market turmoil may be ending is also buoying oil prices, though this isn’t yet translating to a rush of buyers.

    Peter Beutel, president of Cameron Hanover in New Canaan, Conn., said, “New buying…may come back, but we would be surprised to see it come back in the next four weeks.”

    Thursday’s rally is filtering through today which for the moment seems little more than a technical rebound from the “sizable correction” of the $78.77 a barrel all-time high posted Aug. 1, said Gene McGillian, broker at TFS Energy Futures.

    As the driving season comes to a close, market attention will likely refocus on the supply and demand fundamentals, especially in the run-up to the next meeting of the Organization of Petroleum Exporting Countries on Sept. 11 in Vienna.

    Recent comments by OPEC ministers indicate that they won’t raise crude oil export levels, tightening the market at a time when demand is supposed to increase.

    McGillian reckons this will slowly push crude prices toward the $80 a barrel mark, barring any disasters such as a major hurricane.

    —By Hyun Young Lee, Dow Jones Newswires

  21. 21
    Sambone Says:

    Z – Your funny!

  22. 22
    zman Says:

    I think the news that China took it’s first gasoline import on record last night is probably behind some of the move in gasoline (especially since the draw was Wednesday and this is Friday) but if the guy wants to be lazy and blame the draw who am I to stop him.

    OPEC – same old tired line about them not raising quotas and that’s going to get oil to $80. One, when crude was falling these kinds of guys fell into an opinion black hole. I’m sure they had opinions about oil but not the stomach to voice them. Oil up a buck and now they come out of the woodwork. OPEC IS raising production. Somebody send that guy a link to my posts. Wake up man!

    Can you tell I spent my night with my lawyers?!

    Nicky? Where’s Nicky? Paging Nicky – love to get your thoughts on heat, RB now.

  23. 23
    Nicky Says:

    Morning all. Sorry for the delay but trying to get organized as I am going to be away for 9 days.
    Distillates has resistance at 19974 and then 20400. Distillates would have to take out 20500 to turn the picture bullish again. 10 dma average is at 19781 and 20 dma is at 20059.
    RBOB has resistance at 19750 and 20050. 20 dma is at 19786.
    WTI has resistance at 7155 and 7285. 10 dma is at 7095 and 20 dma is at 72.77.

  24. 24
    Nicky Says:

    Distillates very short term looks to be retracing the move from todays low to high, currently close to the 38.2 retracement at 19762. 50% retracement comes in at 19716.

  25. 25
    zman Says:

    More on the lease sale:

    Here’s a link to the summary sheet for LS 204:

    http://www.gomr.mms.gov/homepg/whatsnew/newsreal/2007/070822.pdf

    Check out the deep pockets on the foreign set! Statoil, BP and PBR led the way at least in terms of dollars.

    DVN comes in at the top of the U.S. firms ahead of all the majors.

    XOM was apparently too busy buying it’s stock back to make the top 5 cut, lol.

    If you’re a geek like me these are fun to attend or you can listen on the radio which is the single most monotonous show on earth which I have listened to countless times. I plan on going through the detailed lease list this weekend to see if it points to any small caps who think they’re on to something.

  26. 26
    Nicky Says:

    Distillates MAY have ended the first wave down with an ending diagonal and may now be tracing out a wave ii retracement or wave i may not be complete and we may need one more shot to the downside.

  27. 27
    zman Says:

    Nicky – Thanks for the levels. So you think HO has a little room to run here. Say a couple of pennies?

    RBOB maybe a penny or so or do think this is enough for now?

    9 days? No contact for 9 days? Talk about a gut shot.

  28. 28
    Nicky Says:

    Z – if I get the chance I will check in a couple of times during the week.
    IF distillates has bottomed we should now see a correction of the whole move down so yes it has room to run.
    RBOB although further along too could run a bit further.
    However be aware that this is a countertrend move – that said wave ii’s can retrace most if not all of wave i.

  29. 29
    Nicky Says:

    Nat gas looks to be near the end of this move and then we should see a countertrend rally which should be a 3 wave affair. Look for major resistance on the rally at 6000, 6140 and 6200.

  30. 30
    zman Says:

    Calling CHK Out Watch: New HQ building in W. Va for their Appalachian division described as “semi-circular with it’s design reflecting the rotation of a drillbit”. I could care less.

    Always bugs me when companies talk about the latest steel and glass effigy to their greatness. Sorry, but I’d rather they rent an existing space and save the dough and more importantly the brain time on more important things. Not that they’re not doing a great job as they are but why PR this kind of stuff.

    I’d just stress that Appalachia is the only region of the country getting a premium to Hub right now and what a brilliant move it was to buy in back in Fall 2005 (oops price may be an issue there but I seem to remember it wasn’t too high given the spike in gas at the time). At least they tucked in the part about being the second large appa gas producer before telling you the name of the architects who designed the new building.

    Mobley – if you’re reading this…still waiting for the transcript of the private call with debt holders the other day, lol.

  31. 31
    zman Says:

    Nicky – And here I thought natural gas was going to $4!

  32. 32
    sane Says:

    Wow z is cranky today 😛

  33. 33
    zman Says:

    It’s just that I went to the trouble of finding edible hats and now we’re talking $6 gas again. Ok, ok, I’ll stop. 😉

  34. 34
    Sambone Says:

    Z – your a funny guy! Good fellas

  35. 35
    El Diablo Says:

    I’m waiting for the youtube video of you eating the hat…

  36. 36
    zman Says:

    Sambone – what happened right after he said that?

    El D – no problem although it’ll be a pay per view event like everything else around he in a week’s time, lol.

  37. 37
    El Diablo Says:

    I’ll be able to afford it!

  38. 38
    Sambone Says:

    Hopefully you don’t have a gun, Z.

  39. 39
    zman Says:

    $69 / month and you can watch it over and over and over and over…..

    Sambone: Only a 12 gauge. I hate ducks…unless they’re wrapped in bacon.

  40. 40
    Nicky Says:

    Gonna make a few comments on the broader markets. Rammastr I know in particular is following this.
    As previously stated my preferred count is that the top is in and we have completed i down and are now in a wave ii corrective retracement which would last a week or two. I have previously given levels which may turn this rally back down. Even with this count we could still sell off again to say around 12800 on the dow and 1410 on spx before mounting another rally. If the top is in then we really should not move beyond 1491.93 spx futures and 1484.12 spx cash.

    For those following these indices I would like to point out an alternative count which warrants close attention.
    This count says that in fact the move off the July high was in fact only wave iv correction. And to be sure you can see a clear 3 wave ABC down. As pointed out previously the numbers that needed to be taken out on the downside were 1375.50 spx (futures), and 1369.41 spx cash. So guess what the market turned on a dime as it got to this level. If this count is correct then we are likely in wave ii and tracing out an abc correction. This correction would be expected to find support in the 1447.50 spx futures and 1440.20 spx cash.
    Any move below this levels in an impulsive manner would indicate the resumption of the larger decline and the bearish count.

  41. 41
    jimbo Says:

    “mortgage punks” have a package deal with CNBC. Make a few “cameos” and Cramer does a meltdown on your behalf. FF miles included.

  42. 42
    Nicky Says:

    Z – it is going to $4. But it needs a correction first!

  43. 43
    Sambone Says:

    Z – So today your Tommy Devito?

  44. 44
    zman Says:

    Sambone – sure, other than the fact that I’m quite a bit taller than Pesci.

    Nicky – this bet is feeling a little lop sided. What do you and your $4 ilk do if gas goes to $7 before $4? 😎

  45. 45
    zman Says:

    Jimbo – CNBC

    Criminally Negligent and Biased for Crude

    or

    Cameos for Negligent Bumbling CEOs

  46. 46
    Nicky Says:

    You can’t change it now Z – however cranky you are! It was a straight up bet on whether nat gas goes to $4. I guess we could perhaps put a time limit on it depending on what everyone says. My own view is that we should see it in the next couple of months. FWIW I doubt we will see 7 before 4 but even if we did see 7 again in the near term its going to 4 after that.

  47. 47
    El Diablo Says:

    Tupp around? any thoughts on Turkish Grand Prix? It is a summer friday after all…

  48. 48
    scoop006 Says:

    Ms.Nicky$ Z I think this entire community would be very pleased ig NG hits 7 before 4

  49. 49
    El Diablo Says:

    Ehemmm, not the entire community.

  50. 50
    zman Says:

    N – Oh I didn’t want to change it just add to it. And if it’s open ended and the democrats win the white house and everything eventually runs on rainbows (after it goes to $30/Mcf when they “take those oil company profits) then gas will be worthless and I don’t think that’s fair.

  51. 51
    El Diablo Says:

    Unless, of course, we are talking about the Jan08s. In which case, I agree that they will hit $7 before $4…

  52. 52
    jimbo Says:

    Re: #45

    CNBC Cronies need Bernanke Cut

  53. 53
    Nicky Says:

    Scoop – don’t want to see anyone on here lose money on it because it goes to $4. Just my TA and hopefully some can benefit.
    Z – quite happy to say before the elections!

  54. 54
    zman Says:

    hmmm, we didn’t specify which contract, did we? I smell a technicality. Thanks El D!

    Jimbo – Nice!

    Energy limping higher…refiners strong, oil service strong, E&P mixed bag.

  55. 55
    El Diablo Says:

    nat gas 4 mos fwd is +$2.50

    Would take an ice age to get there, which would put Al Gore out of business.

  56. 56
    zman Says:

    EL D – I’m ok with that last bit!

  57. 57
    scoop006 Says:

    El-D Please accept my apologizes.I should have specified “majority” of community. Is it true your leaving this board Sept.1. Hope not. I enjoy your comments and posts.

  58. 58
    Stephen Says:

    SPX resistance at 1471, Nicky do you think it will break the resistance? Last time this happened it ran all the way up to 1497.

  59. 59
    scoop006 Says:

    What’s up with NBR? Another buyout rumor?

  60. 60
    zman Says:

    NBR – hmmm, it is a little stronger than the rest of the OIH. No telling.

    OII running hard and fast again.

    RIG down was another gift.

    Ah PTR…just won’t stop running until I actually buy some calls.

  61. 61
    Nicky Says:

    Sorry Stephen – a bit late with my response and we are now trading above that area. IF (and its always a big if) the market can hold these gains into the close then we should make a test of the 45 dma which comes in at around 1495 in the days ahead. From there expect to see another sharp correction to the downside which should test the 1400 – 1420 area.

  62. 62
    Sambone Says:

    Nymex Crude Rises Above $71 On Gasoline Rally

    DOW JONES NEWSWIRES
    From Market Talk:
    [Dow Jones] Nymex crude rises above $71/bbl, on the back of a rally in reformulated gasoline blendstock, or RBOB, which has taken place since Wed’s DOE report showed a 5.7 million barrel decline in gasoline stockpiles. “The main driver” behind today’s crude oil rally has been the strength in the gasoline market, said Jim Ritterbusch, of Ritterbusch and Associates. RBOB futures have been given a boost “ever since we saw Wednesday’s big numbers with this big gasoline draw,” he added. Oct Nymex crude +$1.28 at $71.11/bbl. Sep reformulated gasoline blendstock +5.54c at $1.9786/gal. Oct ICE Brent +79c at $70.65/bbl (roshanak.taghavi@dowjones.com)

  63. 63
    El Diablo Says:

    yes, true. While I enjoy Zs commentary, I already do the same research. I come here mainly for the daily chats. The ‘moderated’ exchange of ideas (and debates) are insightful–as opposed to most sites that are flame-fests. Its commendable that such a ‘respectable’ community has been built on a free site.

  64. 64
    scoop006 Says:

    El-D.Sorry to hear it. I think the exchange of idea’s benefits all. Perhaps you will reconsider as the price of admission is quite fair.

  65. 65
    zman Says:

    I just got asked by Wall St Tools to give them free content. Man are Friday’s weird.

  66. 66
    zman Says:

    Actually that company is Istockanalyst.com which may be related to wallsttools.com. Anybody know these guys?

  67. 67
    Nicky Says:

    Natural gas finally breaks out of this range to the downside. There is no real support until 4.050 (!). Minor support at 5.460, 5.405, 5.390,5.270.

  68. 68
    zman Says:

    So, are we betting on long it stays down there too. Plus $4.05 is not $4 lol.

  69. 69
    zman Says:

    Not that this matters to you chart types but 2Q saw ceiling test write downs over $5.75 gas. It’s part of the misguided SEC reserve doctrine issue but it also tells you that sunk cost or not, a lot of gas (recently acquired acreage in prolific plays especially) is not going to be economic in a lower gas environment. Since this is where the bulk of the growth is coming from get ready for the parade of shut in PRs.

  70. 70
    zman Says:

    OIH through 175.

    OII really stretching out now. Still, $5 gets you to the post 2Q high and nat gas prices have just about no effect on their business in the near or medium term.

  71. 71
    zman Says:

    Nicky – did you say Dow 13,800 before hard sell off?

  72. 72
    Sambone Says:

    Nymex Crude Back Above $71 On Chevron Refinery Outage

    DOW JONES NEWSWIRES
    From Market Talk:
    [Dow Jones] Nymex crude surges above $71/bbl on reports that Chevron (CVX) has declared force majeure at its 330,000 bbl/day Pascagoula, Miss., refinery due to damage caused by a fire Aug 16. “Crude seemed comfortable just in the $70.50 area until the force majure news rallied us further,” says Tony Rosado of IAG Energy Brokers. “Everything is reacting to the news. Heating oil, gasoline and oil are all working in sympathy with each other.” Oct Nymex crude +$1.25 at $71.08/bbl. Sep reformulated gasoline blendstock +5.28c at $1.9760/gal. Oct ICE Brent +74c at $70.60/bbl(roshanak.taghavi@dowjones.com)

    [Dow Jones] Nymex crude rises above $71/bbl, on the back of a rally in reformulated gasoline blendstock, or RBOB, which has taken place since Wed’s DOE report showed a 5.7 million barrel decline in gasoline stockpiles. “The main driver” behind today’s crude oil rally has been the strength in the gasoline market, said Jim Ritterbusch, of Ritterbusch and Associates. RBOB futures have been given a boost “ever since we saw Wednesday’s big numbers with this big gasoline draw,” he added. Oct Nymex crude +$1.28 at $71.11/bbl. Sep reformulated gasoline blendstock +5.54c at $1.9786/gal. Oct ICE Brent +79c at $70.65/bbl (roshanak.taghavi@dowjones.com)

  73. 73
    Sambone Says:

    Z – For the 2007 experience we lost 10.7 percent from the mid-July peak to the August 16th low. A 33 percent tracement brings us to 13019 – done. And a 66 percent retracement would be 13521 – this
    would bring us back for a test of underside of the declining 50-day moving average.

  74. 74
    Sambone Says:

    The length of this bull market which started in October 2002 in the United States and in March of 2003 for
    the overseas markets, counting on fingers and toes we were 57 months up from the bottom in July. How does this measure up against history? First, from our friends at Lowry’s I know that going
    back to 1896 and using the Dow Industrials that the average bull market lasts 39 months. 57 months is long in the tooth or geriatric. There are two bull markets that lasted even longer –
    the 1923-29 market which lasted 72 months. I don’t personally remember it but we know how it ended. And then we have the 1990-98 episode of 90 months without a 20% decline (some
    technicians consider 1994 a stealth bear market. If you were involved in the bond market it was a terrible bear market and nothing was stealth). Could the rally from 2002 go on longer? Perhaps, but the advance-decline line, I think, has put in a top. This three-year view of the Total Market
    Advance-Decline Line (second chart below) confirms the same action in the S&P 500.

  75. 75
    Sambone Says:

    Do you think we will get a powerful bounce here before we go down again? In some ways this current nearly 5-year advance is likely 1987. The rally that peaked in 1987 had also extended for
    5-years and had five intermediate up legs. A typical bull market has three up legs but there are sometimes a fourth and fifth and even a sixth up leg. This current advance seems to have nine lives.
    Look at a chart for 1987 experience where the Dow declined 10.1 percent before a 7.8% recovery.

  76. 76
    jaran Says:

    Z – What’s up with CLR today?
    I didn’t see any news… oil is up but they recently hedged at higher prices anyway for a large percent of their production. Is this the natural gas effect on E&P? any opinions?

  77. 77
    zman Says:

    Sambone with the late Friday comedy…Sweet!

    1994 was the worst…rate hike after rate hike. If there’s one year I could take off my resume and scrub from my memory that would be it. I was managing small cap growth stocks (long and short) at the time. tiny up, tiny down, tiny up, tiny down. Talk about a market that couldn’t get started in either direction. I remember losing money on both sides of the trade for months on end.

    Didn’t see a link to a chart there in that last bit.

  78. 78
    zman Says:

    Welcome Jaran,

    They sprang off the $14.30 level pretty handily in the last few days. This is one of those days where what’s up early (in most cases) continues to swell late. What wasn’t up early doesn’t get the same attention. Early on they were down and that combined with their status as “new” player quells a later broad market tied rally in the stock.

  79. 79
    zman Says:

    more for Jaran…as to gas, shouldn’t be, they’re very oil as domestic E&Ps go these days.

  80. 80
    rammastr Says:

    Thanks Nicky!

  81. 81
    rammastr Says:

    RIG seems to be wearing an anchor.

  82. 82
    zman Says:

    that would be funny if I didn’t own it. It was up big early and sold off negative. Then the comments on CLR apply as to being down when everything else decided to launch. Still, it’s been nice the last several days even though I guess I got in a little late I could punt now for a 40% gain but I think it’s going higher and will sit pay on my $105s

  83. 83
    rammastr Says:

    I own it as well. Sorry, just an observation. It would happen again. “funny… funny like a clown!?”

  84. 84
    zman Says:

    Ram – was it you that asked about my thoughts on VLO the other day? Quick trade vs can it go to $70? The options trade in me says punt half for a 2 day 80% profit. The stock fundamentalist says it’s cheap. I’m trying to lose half now.

  85. 85
    zman Says:

    Ram – never apologize on this site! That’s my job. Clowns scare me as child and to this day I believe they belong at the rodeo, not the circus. Funny “ha, ha”. Not funny “weird”.

  86. 86
    rammastr Says:

    Yes, and I took the 70’s for 0.85 and sold them for 1.50. I didn’t want to stick around. I still remember HAL,NFX, and CHK.

  87. 87
    zman Says:

    Housekeeping Item:

    If you signed up to reserve a spot and no longer wish to subscribe please let me know at zmanalpha@gmail.com. Thanks.

  88. 88
    zman Says:

    Ram – nice and ouch. Newfie is stuck, should unmire soon as they couldn’t get enough at $50 but are happy to sell at $45. HAL – starting to rally. CHK – that’s a long term play.

  89. 89
    c. ladd Says:

    Z-man

    Have been reading your site for several months. Lots of good stuff. You’re a little more short term and option oriented than I am, but you’ve assembled much of the information that I look at into a great format.

    I have been watching the CFTC reports as to the non-commercial long position in oil. It has been falling as would be expected. Today’s report shows that longs dropped by 15,900 to 213,450. Shorts increased by 12,600 to 113,095. Net change was 28,600 to a net long of +/- 100,355. This is a 28% decrease in spec long on oil.

    I think that the negative pressure on oil from the specs unwinding their huge long is well on its way to having run its course.

    It seems that many expect the oil story to follow the same script as last year. I think oil will be much stronger as supply demand situation is much stronger.

  90. 90
    zman Says:

    Welcom c. ladd and thanks,

    On the time horizon I write to the options market true but I do hold long term stock positions and when the broad market gets a bit crazy like it has of late I look to add shares there. So far I ‘ve been shying away as Nicky, Sambone and Co.’s prognostications for a lower broad market have not yet been appeased.

    On oil and the CFTC…I don’t track it closely but I concur. I’ve alway thought that on oil the CFTC doesn’t give you a complete picture of the action but it does tell you the general sentiment. While I don’t buy the Goldman price target I do think we’re going to be in a range of $60 to $75 for some time… Nicky is better than I with the charts though and I respect her opinion to the Nth degree.

  91. 91
    jaran Says:

    Z,
    Thanks man! I especially appreciate the relative oil/natural gas comment… Just wondering (if you feel like it of course) what the average e&p n.g. / oil distribution … and does clr state in their filings or somewhere their breakdown so you can compare… just looking for basic guidlines because the e&p’s usually give everything in some measure for oil/n.g. and i don’t know if that is a high or low or average number compared to other e&p…

  92. 92
    rammastr Says:

    Speaking of NFX…does it have the momentum to pop 10% in 2 to 3 weeks?

  93. 93
    jaran Says:

    Z – FYI – i wanted you to know that i got to your site from YAHOO FINANCE on the CLR FINANCE BLOG commentary coming from SEEKING ALPHA… (WHEW!!!). I wish yahoo would link directly to your blog or have an option for that so that they have a larger blog link to allow people to be exposed to quality financial blogs…

  94. 94
    zman Says:

    Ram – well now that’s the million $ question isn’t it? Right now my 13 year old sleeping cattle dog has more momentum. Not to make light of your plight b/c I lost on some of my Augusts and my Septembers are stinking. I’m being patient though.

    Jaran – Thanks. SeekingAlpha has been kind enough to post my daily ramblings at no pain to me for quite some time now. I will miss them but soon Yahoo, and the others who SA syndicate my column to won’t be getting much of anything.

    I’m still torn as to what should be publicly available and welcome all of you guys’ thoughts on that.

  95. 95
    Nicky Says:

    Z – regarding Dow 13,800.

    Support on SPX is now at 1450 (200 dma at 1457). I expect this to hold and we should challenge the 1495 area. At that point I would expect to see us make another correction back towards 1400 – 1420.

    Dow may again test 13,273 but we should see 13447 challenged, again maybe higher, before a correction back towards 12,800.

    How the indices react when they reach the lower levels will hopefully reveal whether we are on a bearish or bullish path.

    1369.41 spx cash is the number which needs to be etched on everyone’s mind. If it goes then down we go.

    Otherwise please note as explained in #40 that there is still a very bullish alternative out there which delays the onset of the bear market.

  96. 96
    zman Says:

    Nicky – thankyou very much. Have a great vacation but do try to check in 😉

  97. 97
    jaran Says:

    Z,
    my 2 cents…
    most financial bloggers have the same issues… as their labor of passion takes more of their time in order to monetize their work they do one or more of:
    1. offer paid membership for some or all content or specialized newsletter (see kirk report)
    2. offer paid links/advertising usually in terms of trading materials (see trader mike) and video commercials (see alpha trends which recently added commercials to their daily live commentary)
    3. offer products and services such as trading books (see bill cara), dvds, software…
    3. offer paid live seminars classes etc. (see alexander elder) and some free sponsored third party seminars (see alpha trends free sponsopers trading topics seminars through his broker)

    some offer all of the above but that makes for a tacky site that no one visits more then once… I think the subscription model you have chosen is great but I do not think you should discontinue all articles to third parties such as seeking alpha or any other broadly read blogs/web channels… I think you may want to consider an occasional article on say a favorite stock or another topic on a weekly or monthly basis and pursue yahoo/google finance blog linkages as the most desirable channel and forming additional relationships with sites such as wall strip and successfull aggregators (like seeking alpha) and possibly successful bloggers…

  98. 98
    T-Tupp Says:

    El- you still here?

  99. 99
    jaran Says:

    Nicky, etal.

    This is my general Market opinion…
    We are not out the woods yet with regards to SPX especially we crossed the 50 day EMA but this is the critical point usually so a pullback here should hold above the 200 day EMA.
    We have had two significant pullbacks this year that were different from bullish pullbacks in the last years of the bullmarket.
    We still have to see the end of the credit scares and the impact from them. Just have a look at the COVENTREE fiasco affecting canadian miners from CAMECO to IVANHOE. CAMECO the 500 pound gorilla has announced that it has (this is of the top of my head), 120 million (about a third) of its cash tied up in us and canadian asset backed bonds and has not had any luck getting the canadian portion (13 million) back… the american stuff is due through september… Since many miners in Canada have been impacted already, I beleive that any short term debt blowing up in America in the next month or so will have a significant impact on companies and perhaps the market in general…

    This is my opinion…

  100. 100
    zman Says:

    Jaran – very much appreciated. I am a big fan of The Kirk Report. I have no interest in options 2 and 3. Obviously I’m executing on option 1 and am considering an offer on option 4 although honestly it sounds more like a distraction than something I’d truly be interested in.

    I plan on doing exactly what you’re talking about as per the free content…select content will go to the masses. Just not the daily and not as current as I have been.

    Tupp – I think he wanted to talk about racing. You haven’t been around in awhile. How’s trix?

  101. 101
    T-Tupp Says:

    trix? lol

  102. 102
    Nicky Says:

    Big F1 fans in this household too! Don’t find as much support for it this side of the pond.

  103. 103
    T-Tupp Says:

    ive been, here just not really talking.

    the vlo IV took a big hit this week eh? sold some puts at the begining of the month.. at a delicious ~ 55% IV

  104. 104
    zman Says:

    how’s trix = what’s up? at least in my limited neck of the woods.

  105. 105
    T-Tupp Says:

    i know. nicky you should tell your husband to come up to Montreal for next years grand prix… its a beautiful city

  106. 106
    T-Tupp Says:

    Z you know of any other canadians on this site?

  107. 107
    zman Says:

    F1 rules! Much better than just turning to the left. Best James Garner movie = Gran Prix

  108. 108
    zman Says:

    Tupp – they obviously exist as you can see from the map at lower right on the sight. I’m not at liberty to disclose their identities other than to say they exist. They however, can speak up or tell a joke or pilot the Enterprise or whatever else it is you folks do, lol.

  109. 109
    T-Tupp Says:

    oh my god i know! whats with you yankeys and nascar???!!! that could probably be the most retarded sport ive ever witnessed… me and my buddies call it degenerate toilet bowl racing.

    as for the Istanbul grand prix, its a beautiful city and an exciting track. i have a friend from university who lives their and would love to meet up with, but am unfortunately going to Vegas for the weekendnd 🙁 hahaha. i promise to be posting from my terrace at the Wynn on monday tho….

  110. 110
    zman Says:

    Tupp

    My wife’s uncle works for Pirelli in advertising. And no, we can’t get the calendar. He lives in LA but goes to A LOT of races all over the globe. Man that’s the life.

  111. 111
    T-Tupp Says:

    wow, i saw there was someone who visited from churchill manitoba!! i thought only polar bears livd there!!! ahahah

  112. 112
    T-Tupp Says:

    shumacher had the life! the sport is alot less exciting now without him. did you see when he stopped last season to let his opponent catch up than beat him anyways?

  113. 113
    zman Says:

    No, unreal…fair yet disastrously unfortunate for the other guy.

  114. 114
    zman Says:

    Have a great weekend gang. The weekly wrap will be out tomorrow and the email with subscription instructions will go out on Sunday. Have a great one!

    Z

  115. 115
    T-Tupp Says:

  116. 116
    El Diablo Says:

    Tupp, I was out all afternoon. Just wondering if you are a Hamilton fan, he’s at top again after 2nd practice session. I personally like the Ice Man, but his driving needs to mature a bit. Unfortunately, he may not have the opportunity if Hamilton continues to dominate–hard to develop when you’re under pressure just to keep up. Hamilton is shaping up to be the Tiger Woods of F1… I must say, I’m quite impressed by him.

  117. 117
    T-Tupp Says:

    yea it looks like he will probally take the season. impressive driver, but im a diehard fan of Ferrari as a constructor.

  118. 118
    Milwaukee Roofer Says:

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    […]Zman’s Energy Brain ~ oil, gas, stocks, etc… » Blog Archive » Friday – Gas Review + Stocks We Care About Update[…]…

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    Zman’s Energy Brain ~ oil, gas, stocks, etc… » Blog Archive » Friday – Gas Review + Stocks We Care About Update

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