19
Jan

Wrap – Week Ended 01/18/08 (In Progress)

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wrap-011808.jpg

1) Irrational Exodus? Worst week in recent memory for the energy sector. Neither falling oil nor gas (both fell just above 2%) were responsible for the move. This was hot money, leaving a sector that had been working well, surfing the wave of an E&P boomlet itself inspired by strong oil and gas prices. And such, it is creating some opportunities right before 4Q results and reserve report (see below)

2) Drybulk Rates Enter The Capitulatorium. I stole the word from a subscriber but I fully expect it to be one of the new words Webster's adds at the end of the year to describe the general market action of January 2008. The stock charts from the drybulk group have similar patterns to the day rates show below. I will be long two names here soon.

drybulk-rates-011808.jpg

3) Natural Gas Speculative Shorts Hit Another Record Just As The Weather Gets Really Cold Too many lemmings on one side of the see-saw can limit the potential decline in price as many of them are well underwater having "gotten it wrong so far" and will be exiting on the first chance to get close to even.

  • While I and others have been pointing to the tough set of storage comps we face for the next several weeks and saying that this should result in lower gas prices in the very near term (so far true), weather forecasters have been busily eating crow on their warmer than normal weather predictions. A majority of the U.S. is expected to be colder than normal for the next two weeks.
  • Monday's HDD readings will likely be higher than expected allowing gas to temporarily regain $8 but with spiky upside potential into the $9s or even $10s in some location for brief periods (hours) on short covering during the next two weeks.
  • I still think gas is on borrowed time for a move to the mid $7s but this weather is giving it a bit of an extension and if it continues into mid February it could result in serious further erosion of the

 

cftc-ng-011808.jpg

Earnings Calendar For The Stocks We Care About List - The 4Q Earnings Tab in the members section at upper left will be online by Monday and will fill out (at least the schedule part) as dates become available.

 

more to come... 

47 Responses to “Wrap – Week Ended 01/18/08 (In Progress)”

  1. 1
    zman Says:

    test comment

  2. 2
    aaatest Says:

    back atcha

  3. 3
    zman Says:

    how about now?

  4. 4
    aaatest Says:

    nope

  5. 5
    zman Says:

    16px, bigger?

  6. 6
    aaatest Says:

    no

  7. 7
    zman Says:

    and now, color?

  8. 8
    aaatest Says:

    yes

  9. 9
    zman Says:

    Packers lost…thanks, later.

  10. 10
    zman Says:

    underscored name link working?

  11. 11
    zman Says:

    that’s no good

  12. 12
    zman Says:

    last test

  13. 13
    aaatest Says:

    ganight

  14. 14
    zman Says:

    Article on the recent decline of the Baltic Dry Index as it is indicative of (or isn’t) a global growth downturn:

    http://www.marketwatch.com/news/story/shipping-index-plunges-six-month-low/story.aspx?guid=%7BAC84B011%2DBD0B%2D4522%2D92FF%2D4BA4CEEB302C%7D

    The article makes the points that we’ve been talking about on iron ore and China and that Bill added about a potential merger in iron ore and weather problems in Australia.

  15. 15
    zman Says:

    U.S. market closed today so there won’t be a monday post other than a wrapup of the wrap. S&P futures are trading off 3% this morning and oil is down another $1.50 as Asia:
    http://www.marketwatch.com/news/story/us-recession-fears-spark-deep/story.aspx?guid=%7BFA34EC4F%2DFFF6%2D4BEE%2DAF28%2DE41F832BF4AC%7D

    and now Europe are having tough sessions…French banks facing more writedowns.

  16. 16
    TTupp Says:

    test

  17. 17
    TTupp Says:

    euro markets getting slaughtered. all down about 5%! they typically move the same from day to day as us markets correct? like a huge day for us is 3.5% so this is a ridiculous sell off correct?

  18. 18
    Nicky Says:

    Wow carnage! I have never seen this where we have yet another Asian and European session to deal with before the US opens.

    SPX has support in the 1235 – 1250 area. Dow has support at 11325 – 11,525.

  19. 19
    Nicky Says:

    TTupp – gulp – its what to expect in a bear market. Australia down 11 days in a row – hasn’t happened in 26 years. India was down 10% at one stage last night. US indices fell every day last week as we know! Everyone is expecting a huge fall tomorrow. This looks like capitulation in which case they will step in and buy it I think but probably not before we see huge falls.

  20. 20
    zman Says:

    I show S&P futures were down 4.55% or 60 points at their close.

    Dow futures down 450 points

    Brazil fell 6.6%.

    Listened to Fed expert on Bloomberg this morning talking about how the Fed has been all talk the last two weeks and no action. He thinks they should have done an inter-meeting cut, but that they won’t. And though the market is currently giving a 74% chance for a 3/4 cut he says the Fed’s and Bernanke’s conservatism will limit them to a 50 bps cut now and 25 bps in February as their first inter-meeting cut.

  21. 21
    TTupp Says:

    the high fliers are gona get killed tomorrow: agriculture & solar.

    if we get a miss from pot could get some downside- and its not completely off topic here because the agriculture sector is correlated to energy. does anyone know why? i read that in a street.com article, but they didn’t explain themselves.

  22. 22
    zman Says:

    Agriculture correlated to energy for 3 reasons:

    1) biofuels movement becomes economic only with higher competing fuel prices (oil)

    2) agri uses a ton of diesel. higher diesel = higher crop prices.

    3) there is a weak negative correlation with natural gas for the fertilizer guys since its their number one cost.

  23. 23
    TTupp Says:

    eog might get a nice haircut since it is the highest priced E&P.

    cnq is expensive too, and on a weekly chart has one o the prettiest H&S patterns.

    apc is a high flier and doesn’t have support for -13%, and strong support -30% from here.

    intigrated co’s

    SU – if it falls through its current support it could go for a tumble. its priced high for high growth aka expensive (highest of the int’s.).

    PBR – has no support for 30-40% declines from here. and is also trading high with a C/Y P/E of 15.5 .

    HES has run up in recent months and is still expensive and could prob fall about 17% or so to its fall support.

    CEO – has developed strong support at $150 and on top of the fact that the hang sang looks to be in the middle of a melt-down, it has a long way to fall. but the options on it are crappy and illiquid

  24. 24
    Nicky Says:

    Looking at the charts and as I think I have mentioned before the Dow has a h & s target at 11500 which looks like it is going to be hit tomorrow. In that area we are into some fairly big support. Nothing would surprise me tomorrow ie we could even finish positive on the day! When I said on Friday this market was in a position to crash I have to say I did not expect it to happen!

  25. 25
    zman Says:

    T:

    That’s a good list but I’m not sure if they don’t open at the lows, bounce a bit, and then go lower tomorrow…very tough to say.

    Like the HES especially and some others that joined the $100 club recently and will likely fail it now including CLB which I like on the long side under normal circumstances.

    BHI and BJS should take a hit over SLB comments anyway.

    I’d add DNR to the list of expensive, oil E&P companies for a mid cap name that is pricey and recently split.

    Natural gas should get some support from the weather which is still running colder that normal but it probably won’t help out APC now matter how good their story is shaping up…that is one I would not short but will use this meltdown as an opportunity to enter as gas is going to do better than a lot of people, including me recently, have been thinking…still I think gas goes to $7.50 on recession worries + down oil …then it climbs with the storage numbers, eventually clawing back to north of $8. Next week’s sotrage withdrawal likely to be huge.

    Solar: They got a small deadcat on Friday, should be abandon ship time on Tuesday. FSLR, ESLR, SPWR favorite shorts here.

  26. 26
    zman Says:

    Nicky – you’re a prophet. I was asking Sam for history on the three day weekend crash potential but he had nothing….I guess now we have a benchmark to go by, lol

  27. 27
    Bob Says:

    SU fell 4.9% Monday on Toronto Exchange on 1.6 million shs. Reports earnings BMO Tuesday. Estimate is 1.51-1.57. Conference call 9:30 AM EST

  28. 28
    Wyoming Says:

    Natural gas and fertilizers:

    Long Version:
    http://www.noble.org/Ag/Soils/NitrogenPrices/Index.htm

    Short version:
    Used for the high temps and pressures to create anhydrous ammonia gas and also the hydrogen for the process.

  29. 29
    Nicky Says:

    Japan off its lows. Heavily down but nothing too panicky right now.

  30. 30
    TTupp Says:

    su kills their earnings. $2.08/sh q4 07 vs. $0.72/sh q4 06! 290% quarter over quarter eps growth.

  31. 31
    TTupp Says:

    key corp, bac, and wachovia miss earnings

  32. 32
    Sambone Says:

    It’s gonna be ugly for the energy patch this morning.

  33. 33
    Sambone Says:

    COP down 7% premarket.

  34. 34
    TTupp Says:

    75 bpt emergency rate cut!!

  35. 35
    zman Says:

    Sam – not just energy.

  36. 36
    zman Says:

    T: Re 30: It’s $1.29 after you back out one time items which is light to expectations of $1.52.

  37. 37
    TTupp Says:

    best cnbc morning call ever. rick santelli ripping into cramer! telling him he’s been bullish on his show while the meltdown was going on

  38. 38
    TTupp Says:

    thats z. your my eyes and ears lol. i just read the ticker tape from briefing.com

  39. 39
    TTupp Says:

    im going to mull vix calls here unless they open at 30~

  40. 40
    TTupp Says:

    what are the one time items?

  41. 41
    zman Says:

    Re Su one times:

    reduction of fed tax rate,
    impact of unrealized foreign exch g/l on US $ denom debt
    and backing out project start up costs on the other side of the equation

    = $598mm or $1.29 share
    production was actually off YoY due to maintenance but revs and eps up due to higher prices

  42. 42
    zman Says:

    Notice this emergency rate cut had only a very partial soothing effect on the market….got that run away train feeling now.

    Was down 5% on the S&P futures, that went to down 2% after the rate cut, now down 4.3% and falling. Ben, you waited too long.

  43. 43
    zman Says:

    BJS should get pummeled today

  44. 44
    TTupp Says:

    why bjs

  45. 45
    zman Says:

    BJS – see post

  46. 46
    TTupp Says:

    jesus, vix jumped 40% on the open from fridays close! 27 -> 37%

  47. 47
    Sambone Says:

    How come you guys are posting on the weekend and not today’s?

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