11
Mar

Tuesday – Fed Jacks Up Liquidity

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Yesterday stunk. Probably more for Elliot Spitzer than me but only by a little. Less than two weeks to go before equity options expiration. This morning the Fed is reacting to an increasingly recessionary set of data by lending "up to $200 billion of Treasury securities to primary dealers secured for a term of 28 days, rather than overnight, as in the existing program" ~ Marketwatch. Maybe he's starting to get it. Fed fund futures continue to discount a 3/4 point rate cut for the next Fed meeting on the 18th. Oi touched $109 early this morning while natural gas was seen selling off in a repeat of yesterday's open.

  • The producing stocks, especially the E&P names which have had such a good run of late are showing markedly less zeal for skyrocketing energy prices, potentially emitting signals of over-boughtness. From a charts perspective this may be so. From a price/CF standpoint, not to mention NAV, they have rarely been cheaper or in a better position to grow volumes (at least my favorite names) and further shrink their multiples.
  • The refining stocks lack catalyst and products are failing to get the same speculative support as crude has, cutting into margins. For now, the group appears uninteresting. I may change opinion on a dime but finished gas production remains high and while demand is healthy, it has been stronger ... with inventories bloated, my expectation of $4 retail gasoline this spring may be a curse, not a boon for the independent refiners as more and more people take to mass transit (record highs now).
  • Oil service appears to be trending with the market at large. From day to day certain sub-sectors seem to find favor but there is little follow through on the moves.
  • Drybulks - obvious dichotomy between rising rates which continue to recover towards end highs and a sector that largely beat estimates and has fallen 25 to 30% in the last three weeks. 

Commodity Watch:

  • Crude Oil: Shot up $2.75 to close Monday's trading at a record $107.90 per barrel. You can't blame the dollar or geo-political squabbles (even Hugo Chavez made nice with Columbia), Mexico said its exports were all open...this is just investor fleeing equities for crude and other commodities. This morning crude is slightly higher.
  • IEA Eases Global Oil Demand Forecast: Cuts forecast by 80,000 bopd to 87.5 mm bopd for 2008, up 2%, on weakness seen in U.S. and Europe.
  • 1Q08 Average to Date: $94.94
  • 12 Month Strip Price: $102.80 !!!
  • Analyst Estimates For Crude Prices:
  • 1Q08E: $84.03 from a total of 32 analyst groups. Range is from $60 (impossible) to $95 (spot on if we ended the quarter today).
  • 2008E: $81.70 (from a total of 59 analysts providing annual estimates. Range of $70 to $99.40.
  • 2009E: $78.80; Goldman just raised their target from $90 to $105.
  • Oil-leveraged stocks like APA will benefit greatly as numbers come up. Adding about $0.20 to annual cash flow for each increase in oil prices, APA's multiple of 2008 CFPS falls from ---x to ---x if you mark analysts estimates for the year to market.
  • Early Read on Wednesday's EIA Inventory Report:
    • Crude up 1.7 mm barrels.
    • Gasoline up 100,000 barrels.
    • Distillates down another 2 mm barrels.
  • Carbon Sequestration: Canada: We Don't Know What It Will Cost And Frankly We Don't Care: 
    • ZComment: This reminds me of the mis-guided rush to force corn-based ethanol down everyone's gas tank in the states.  The negative ramifications have manifested themselves in everything from tortilla riots in Mexico to inflation of food and fuel in the States to the recent realization (on the part of some) that corn-based ethanol may be energy neutral at best. Government, at its best, should do no harm. Rash policy making in an effort to do anything to green yourself up before the next election is not good government.

  • Chinese Oil Production Up 4.2% In February to 3.9 mm bopd. Recent efforts to expand production have been fruitful. I'd show you a graph of U.S. oil production but its just too depressing.

china-feb-08-aaa.jpg
 

 

  • Natural Gas began to retreat early in the day but recovered to reach new highs in lock step with crude. April gas closed up $0.25 to a new record high of $10.02. Natural gas is up 20% in 4 weeks right as winter is coming to an end. Natural gas is somewhat lower this morning, a second day of early morning selling but I won't get excited for my UNG puts until it is much lower. 
  • Imports Watch: Natural gas imports remained flat for the third week in a row at 9.8 Bcfgpd.
    • LNG inched up from 0.6 Bcfgpd in the prior week to 0.8 Bcfgpd last but this is still only half of last year's comparison as demand from Asia (down nuke in Japan, increased consumption for petrochemicals) and Europe (very cold winter and uncertain supplies from North Sea disruptions and the Russians) combine to draw shipments away from the U.S.
    • Canadian volumes are down 1.3 Bcfgpd from year ago period but it will take further deterioration and more time to determine if this is the long awaited decline in Canadian deliverability setting in or just further volatility and the demands of a cold winter north of the border. 
  • 1Q08 Average NYMEX Natural Gas Front Month Price To Date: $8.48
  • 12 Month Strip Price: $10.45 !!!
  • Analyst Estimates: These will all be coming up now.
    • 1Q08E: $7.54
    • 2008E: $7.60
    • 2009E: $7.80

 

Crack Spread Update: Uninteresting at present as margins barely keeping pace with the rally in oil. See comments above.

crack-spread-030708.jpg

Holdings Watch:

CALLS 

  • Added SU March $105 calls for $2.80.

PUTS: No Change. 

Odds & Ends

Analyst Watch: (CCJ) cut to neutral at HSBC, (DNE) initiated at Buy at Jefferies with a $2.50 price target (I've mentioned this wee-one several times in the past but this is their first real Street coverage...solid management underpins good potential here).

(RIG) is out with a fleet status update: A cursory look shows continued improvements. 

(CVX) is outlining 2008/2009 growth, some of which is being derived from a slew of 40 major Upstream projects, each with capex of $1 billion.  Further details in comments.  

81 Responses to “Tuesday – Fed Jacks Up Liquidity”

  1. 1
    Sambone Says:

    8:50 am EST

    Nymex Crude Slips On Fed Announcement, Dollar

    DOW JONES NEWSWIRES

    [Dow Jones] Oil futures slip back below $109/bbl after the Federal Reserve expands its securities lending program and its Open Market Committee authorizes increases in its swap lines with the European Central Bank and the Swiss National Bank. The announcement gave the dollar a shot in the arm, helping cool oil futures a tad. Nymex Apr crude +98c at $108.88/bbl. (greg.meyer@dowjones.com)

    Reported Earlier:
    LONDON — Crude oil futures jumped to new record highs in London trading Tuesday as a fresh slump in the U.S. dollar allied with inflation concerns and a bullish technical outlook attracted another wave of fund buying.

    “It’s still the weakening of the dollar that is driving fund flows into the market,” said Andy Sommer, analyst at HSH Nordbank in Hamburg. “I still don’t think fundamentals support it, but it’s money that’s driving the market.”

    At 1224 GMT, the front-month April Brent contract on London’s ICE futures exchange was up $1.44 at $105.60 a barrel, having set a new record high at $105.82 a barrel earlier.

    The front-month April light, sweet, crude contract on the New York Mercantile Exchange was trading $1.53 higher at $109.43 a barrel, just off its latest peak of $109.72 a barrel.

    The ICE’s gasoil contract for March delivery was up $3 at $980 a metric ton, while Nymex gasoline for April delivery was up 131 points at 272.80 cents a gallon.

    In what some analysts have called a perverse relationship, crude oil prices continue to advance while fears over the U.S. economy grow. Investors are seemingly more concerned by a weaker dollar and the inflation implications of further Federal Reserve interest rate cuts than the economic conditions that may prompt them, they said.

    “For the moment, market participants are choosing to concentrate on inflation and lower returns in other asset classes other than commodities, rather than on the notion that slower U.S. growth could weigh on the global economy and dent demand for energy,” said Andrey Kruchenkov, analyst at Sucden in London.

    The U.S. dollar fell to a new record low against the euro Tuesday, and was trading lower against most major currencies.

    Having now set new highs for five days in a row, and seemingly without a fundamental trigger for the climbs, resistance from sellers appears to have wilted as investors buy into the upwards trend, market participants said.

    “This crude market is finding it much easier to rally and make new highs than to retrace to a level that the fundamental traders feel would more accurately reflect the current supply and demand situation,” said Glen Ward, energy broker at ODL Securities in London.

    With upwards momentum proving robust, detaching crude prices from their spiralling ascent is increasingly likely to require a significant fundamental catalyst, market participants said Tuesday.

    But analysts at Goldman Sachs suggested Nymex crude prices could retreat back to $90 a barrel by spring, particuarly if funds withdraw their buying support amid a weaker fundamental backdrop.

    “Cyclically weak fundamentals in the next few months increase the risks of a substantial fund liquidation which could impact both near-term and longer-dated prices,” they said.

    Partly obscured by Tuesday’s price activity, the International Energy Agency said Tuesday that while high crude prices continue to erode oil consumption in the U.S. and other industrialized nations, demand in China and other emerging markets is likely to remain brisk.

    The agency revised down 2008 crude consumption in the U.S., Europe and other developed markets but revised up its 2008 oil demand forecast for China and other non-Organization for Economic Cooperation and Development countries. It’s overall demand growth forecast for this year was left little changed at 2%.

    —By Nick Heath; Dow Jones Newswires

  2. 2
    Sambone Says:

    7:56 am EST

    Oil Leaves Fundamentals In The Dust

    By DAVID COTTLE
    A DOW JONES NEWSWIRES COLUMN

    LONDON — Oil markets have the distinct aura of one of those passionate but cynical affairs that everyone knows won’t last.

    From the outside it seems incredible that crude should be posting new record highs at a time when more or less everyone agrees fundamental demand across the developed markets is set to weaken. And when chatter that the U.S. may already be in recession is getting more substantive and louder by the hour.

    There is also relative calm in the turbulent geopolitics of the industry. At least, there is no single, major worry impinging on broader-market consciousness.

    And yet here come those highs. Nymex light crude futures for April reached $109.20 Tuesday and Brent reached $105.40.

    Of course, in the Byzantine world of oil nothing is ever as simple as just getting the stuff out of the ground and to those who want it. But oil stocks are still behaving as something of a safe-haven simply by virtue of the inexorable rise in the price of a barrel.

    London’s energy-heavy FTSE 100 benchmark is deriving support from its clutch of oil majors in otherwise arid times.

    Naturally, a weakening dollar is also playing its part here. Many oil traders believe the greenback will have to find a convincing floor before we can pause to think sensibly about what the fundamentals would dictate.

    And it’s true that that floor is elusive. The euro seems poised for a first canter above $1.55. Against the yen, the dollar is loitering nervously in the low 100s. It hasn’t been down here for eight years.

    Perversely, if the Fed has yet another robust hack at interest rates then we could see oil leap up again, with $120 per barrel now eyed. A 75 basis points cut next week is favored, although there is some cryptic talk of more “innovative” policy action. It’s hard not to read “innovative” as “desperate” but let’s not digress too far.

    There are also those who cling to oil as an inflation hedge, although as its gains are a major source of that inflation, it seems this relationship is fraught with contradictions in the longer term.

    But it’s clear that the halcyon days of $25-$30 for a barrel are long gone, though some analysts think $70 would make sense if the dollar recovers some composure.

    And with so many “non-oil” and technical traders swarming into the market and treating oil as a financial instrument, rather than as a traditional commodity, it’s not too outlandish to see trouble ahead. A clutch of laymen buying at the highs doesn’t inspire huge confidence.

    And if the dollar finds that floor, one more rare “safe haven” for equity could fade away in very short order.

    —By David Cottle, Dow Jones Newswires

  3. 3
    zman Says:

    Funny that the dollar is no weaker than it was, at least vs the euro, at mid week last week and in fact, is well off the lows seen last week.

    Natural gas again trying to see reason in early trading, down over a dime.

  4. 4
    zman Says:

    Arkansas getting ready to bump severance taxes…impact SWN and CHK most…probably a non-event for CHK stock, may check SWN. This has little voter support but it’s being ram-rodded through the legislature by the governor who correctly states the state has one of the lowest severance taxes in the nation. What he does not state is that neighboring states like Texas have a 10 year forebearance of taxes on new shale gas wells.

  5. 5
    zman Says:

    DRYS called up $5 on the bid at the open. Just need 4 more days like that and I’m back in business.

  6. 6
    reefguy Says:

    Shale gas- FYI: Pennsylvania(think Marcellus) has no severance and no ad valorum taxes!

  7. 7
    zman Says:

    Reef – I’m sure they are contemplating one. I just don’t like lawyers saying, “hey, we can’t get it by the people in a popular vote, so let’s go around them” … that whole “we know how to take care of you better than you do ” sentiment bugs me.

  8. 8
    zman Says:

    Reef – that DNE is worth a look. They’ve got 2 of the Remington executives on board who are used to taking little companies from small to big given a few years.

  9. 9
    reefguy Says:

    dne- one of the board members is a son of Lee Raymond(ex exxon)

  10. 10
    Bob Says:

    BDI for today (DRYS website still not updating): Baltic Indices 11/03/2008 BDI 8560 (-64) BCI 12315 (-310) BPI 8630 (+21)

  11. 11
    zman Says:

    Jim Watt steered ROIL, later REM from $3 to $40 in a few years and not by way of higher oil and gas production but by finding oil and gas. This is kind of his second coming out party. Nobody cares about these little ones in this environment but in time I think you won’t be able to ignore the growth. Old story, take over fields once held and long neglected by majors along the Gulf Coast and apply capital and new tech to them…lots of resource left behind.

  12. 12
    QUARRYMAN Says:

    Hey Z.

    Is it too late to get in on SU Mar 105s?

    They’re around 3.50 now.

  13. 13
    zman Says:

    Thanks Bob…maybe that’s part of the problem with the stock, investors like that website, lol.

    Saw a piece from Apache detailing traffic at the two biggest ports in the U.S. (City of Long Beach and Los Angeles) showing a pretty good decline in outbound and inbound traffic which may be influencing bulk sentiment. It’s not at all the same game but shows global slowing and people don’t like that for the drybulks.

    Q – I’m watching oil to see if it fads more, now down $0.50. Also, I’m not chasing this Fed inspired rally this morning…it seems to be fading since the open. Maybe I’m wrong but the last several of their ramps have died on the vine either that day or the next. As to SU, I was just contemplating taking my easy coin off the table…this is a very tough market.

  14. 14
    zman Says:

    Q – also on SU, the carbon capture news may also reign in gains…based on 107 oil you’d think it would break into the high teens to low 120s by now, just concerned that if the hedge guys decide to take some profits this kind of stock deflates. But maybe it gets a wind and goes to $110, I’ll consider myself lucky and pull the plug on the way there.

  15. 15
    zman Says:

    Q – if I had to buy something today it would be NFX, CHK, HK, EOG, APC, in no particular order…maybe HK or NFX tie for first. I own them but if I didn’t I be tempted to get in them soon as they are all below recent new highs and moving back up and I like them despite a coming drop in nat gas prices.

  16. 16
    reefguy Says:

    Add XCO to the list for their Marcellus position

  17. 17
    Sambone Says:

    9:47 am EST

    Nymex Crude Flattens As Dollar Gains

    By Gregory Meyer
    Of DOW JONES NEWSWIRES

    NEW YORK — Crude oil futures eased Tuesday after registering record highs overnight as a Federal Reserve initiative to alleviate the credit crunch strengthened the dollar.

    Much of crude’s rise of more than $20 in the last month has been fueled by investors seeking a hedge against the dollar’s historic weakness and fears of inflation. So as the dollar flexed some muscle, traders moderated buying in crude oil, analysts said.

    Light, sweet crude for April delivery was recently up 2 cents, or 0.02%, at $107.92 a barrel on the New York Mercantile Exchange, after rising as high as $109.72 overnight. Brent crude on the ICE futures exchange was trading 33 cents higher at $104.49 a barrel.

    The Federal Reserve on Tuesday morning announced the expansion of its securities lending program and said its Open Market Committee has authorized increases in its temporary reciprocal currency arrangements with the European Central Bank and the Swiss National Bank. The dollar quickly regained ground against the euro and yen.

    “Traders who had been selling dollars and buying crude oil will now have to begin to unwind those positions,” said Stephen Schork, editor of energy markets newsletter the Schork Report in Villanova, Pa. “That means selling crude oil and buying back dollars.”

    Oil futures continued to trade close to new highs. Front-month Nymex crude closed Monday at $107.90 a barrel, up 75% from a year earlier.

    A closely watched voice on oil prices, Goldman Sachs, said in a note Tuesday that benchmark Nymex crude futures could fall back to $90 a barrel this spring if cyclically weak fundamentals prompt funds to liquidate their positions. Having already reached their year-end target of $105 a barrel, Goldman’s commodities research analysts say that the near-term price risk is now “skewed to the downside.”

    In its latest monthly oil market report, the International Energy Agency lowered its projection of 2008 world demand by 80,000 barrels a day, to 87.5 million barrels a day. The energy watchdog agency for the world’s most industrialized nations said high crude prices continue to chip away at oil consumption in the U.S. and other industrialized nations, but warned that there is unlikely to be much relief from current prices because of brisk demand in China and other emerging markets.

    Front-month April reformulated gasoline blendstock, or RBOB, was down 23 points, or 0.1% at $2.7126 a gallon. April heating oil was up 7 points, or 0.02%, to $2.9741 a gallon.

    —By Gregory Meyer, Dow Jones Newswires

  18. 18
    zman Says:

    Market flatlining up 240 to 250. Short covering and then little follow through?

  19. 19
    Dman Says:

    HK analyst day tomorrow?? Have I remembered that right?

  20. 20
    zman Says:

    HK yes, 11 EST

    http://www.petrohawk.com/ir/documents/Analyst%20Day%202008%20Flyer.pdf

  21. 21
    zman Says:

    Oil going green after $1.20 loss earlier

  22. 22
    Sambone Says:

    10:35 am EST

    Nymex Crude Flattens As Dollar Gains

    DOW JONES NEWSWIRES

    [Dow Jones] Nymex crude slips $1 after the Federal Reserve announces it will try to alleviate the credit crunch by expanding its securities lending program and authorizing increases in its temporary reciprocal currency arrangements with the European Central Bank and the Swiss National Bank. The moves breathed life into the dollar, which strengthened against the euro and yen. “Early on the market was continuing an incredible rally, with the expectation that the dollar would never stop falling and oil would never stop rising,” says Phil Flynn at Alaron Trading. “But this was a smart move by the Fed to at least calm the waters a little bit…That led the dollar to rally a bit and caused oil to go back down.” Nymex Apr crude -$1.00 at $106.90/bbl. (greg.meyer@dowjones.com

  23. 23
    zman Says:

    and now its up 20cents at 108.10.

  24. 24
    kyleandy Says:

    z===i believe most of the gas comps u write about are pretty fully hedged. with natural gas refusing to go down, are there any companies out there that are unhedged??
    isn’t jeffries analyst one of the ones u like?? makes DNE more credible if that is so.

  25. 25
    Sambone Says:

    Looks like Wall Street doesn’t believe the “Bear” – BSC

  26. 26
    zman Says:

    K: that’s a good question re hedging, need to do a little digging as many names that traditional leave more gas leverage on the table have been swayed of late to add swaps. Only EOG has come and said no more hedging, they think the gas market that strong. Will do some digging into the major players latest gas hedges…been meaning to look anyway, will be in the post tomorrow.

    Re: DNE. He’s a friend and a smart guy so it does plus again I cannot overstate the credibility of the new president. Up 8% on the coverage is a bit of a slow start..have not read the 2007 results which came out simultaneously and I’ll wait a bit to add in this market.

    Note now DJIA up only 177…Fed post party hangover.

    Natural gas rising to green with oil up $0.50 … just like yesterday…unreal, even as the weather maps turn to warmer than normal.

  27. 27
    zman Says:

    Sam re 25?

  28. 28
    zman Says:

    uuugggg. NG just turned with oil and is trading in exact ratio higher with it again. Completely stupid.

  29. 29
    apbd Says:

    Paging Client 9. Phone call for Client 9

  30. 30
    Sambone Says:

    #25 – Bear Sterns says that they have plenty of cash and no problems, but it seems Wall Street doesn’t believe them because the stock is down 5.5%.

  31. 31
    zman Says:

    BSC – ah, ok thanks

    Gotta feel for the Spitzer family.

    EOG – nice, move to new highs on the day despite the makret.

    Tempted to get more HK before tomorrow on this little dip but I have quite a bit now.

  32. 32
    uop Says:

    zman:

    this NG behavior stinks,

    I sold my UNG to early,

    now my march and apr puts are suffering.

    is there a remedy??

  33. 33
    yona Says:

    client9 was the only thing that could put a smile on my face yesterday
    in fact the second i heard them say client9 on cnbc i tried to buy client9.com but was beaten to it

  34. 34
    zman Says:

    uop – not as long as it just marks oil and oil is seen as a safe haven. The hedge is natural gas longs which I have and are actually working today. The remedy, if you want one today is to cover. We get a gas storage number Thursday that should be below last years number, given the combination of warmer weather, higher production and lower imports but that may or may not staunch this run.

    Yona, have you seen a gas consensus #? I’m thinking high double digits 80 to 90 now.

  35. 35
    Sambone Says:

    The other side of the coin in regards to Commodities.

    Chicago Tribune, March 9, 2008

    Runup in commodities makes them risky
    By Gail MarksJarvis | Tribune staff reporter
    March 9, 2008
    One sure way to lose money as an investor is to buy something strictly because it keeps going up.

    Technology stocks proved it in 2000. Housing proved it in the years that followed.

    Now, analysts are warning investors not to get carried away with commodities. Although gold, oil, metals and agricultural commodities have been breaking records and enriching investors while the stock market has been a loser, many analysts are growing skeptical.

    “The price trend in wheat, oil and gold appears to be similar to the ones seen in the late 1990s for the Nasdaq, and in the mid-2000s for home builders,” Citigroup strategist Tobias Levkovich said last week.

    If investors were to see the prices of many commodities charted on a graph, they would see a line that shoots almost straight up over a short time period. That’s known as a “parabolic curve,” and it usually portends danger for investors–a sign of over-optimism that entices naive followers to join the herd toward the end of a cycle.

    “Be wary of the commodity complex, including materials and its beneficiaries such as capital goods and energy equipment and services,” Levkovich said. “You’ve seen fertilizer and seed companies run up 10- to 15-fold in just a few years.” Long term, many analysts say there is reason for commodities to be strong investments. China, India and other developing nations have been tremendous consumers of commodities. And years of expansion undoubtedly lie ahead. In addition, greater prosperity gives millions of people the ability to buy more food.

    But in the short term, analysts are worried about demand slowing as economic problems in the U.S. curtail purchases of products from other countries, curbing their growth.

    Under such conditions, there could be a glut of commodities on the market and analysts worry about lemming investor behavior–or too many investors buying commodity stocks and exchange-traded funds now, simply because they appear to be one of the few investments working amid a declining stock market.

    Levkovich is warning investors against the broad range of commodities, noting that Europe and Japan are slowing already and that the spillover to other nations may take months to show up.

    During the last 12 months, the Standard & Poor’s 500 index has declined 3 percent while the S&P 500 Goldman Sachs commodities indexes have shown tremendous surges: energy up 49 percent, industrial metals up 21 percent, precious metals up 48 percent and agriculture up 59 percent.

    “The price appreciation of some commodities is supported by strong fundamentals,” but others are along for the ride, noted Barclays Capital’s commodities research team in a report last week.

    For example, nickel and zinc prices gained the most among metals recently–gaining 17 percent and 11 percent, respectively, in just seven days ending Tuesday. Yet they have the weakest fundamentals, the analysts said. Without a recovery in the U.S. and Asian stainless steel markets, the analysts see no reason why nickel’s price should be soaring. Typically, commodity prices rise and fall based largely on supply and demand.

    Corn prices, for example, have hit all-time highs amid strong demand from China as well as ethanol output in the U.S.

    Also, as farmers convert cotton fields to grain production to capture high grain prices, the changes ultimately could leave a shortage of cotton and generate higher prices there. Already, cotton prices are at multiyear highs, along with cocoa, coffee, silver, palladium and aluminum, according to Barclays.

    With gold hitting an all-time high, not adjusted for inflation, other factors beyond supply and demand are toying with the price. Gold tends to climb amid economic and geopolitical worries, growing inflation and a falling dollar–factors currently at play.

    Still, with gold approaching $1,000 an ounce, investors chasing the rising price could be in for a shock.

    “Gold is up about 18 percent in two months, and last year it was up 37 percent, while the Standard & Poor’s 500 only gained 3 percent,” said Leo Larkin, S&P metals and mining analyst. “That’s a huge run-up and it’s probably not sustainable.”

    Goldman Sachs analyst Oscar Cabrera expects gold to average $910 an ounce during the year, and end 2008 at $850. For 2009, he’s anticipating $870 at year-end, and for 2010, $940.

    Meanwhile, Jon Najarian, co-founder of OptionMonster, said it’s dangerous to buy now because speculators are all on the long side, rather than short side, of the trade. “When too many are on the same side, it leads to a correction that gets overdone,” he said.

    Also, when investors are focused on meeting a threshold like $1,000 an ounce for gold, a sell-off of 10 to 15 percent is likely once the goal is achieved, Najarian said.

    Gail MarksJarvis is a Your Money columnist. Contact her at gmarksjarvis@tribune.com.

    Sambone’s comment – “Supply and demand, Fear and greed”.

  36. 36
    yona Says:

    BLMBRG NG -81

  37. 37
    zman Says:

    Thanks yona, sounds about right. Last year was a pull of 104 Bcf.

  38. 38
    zman Says:

    VLO chairman says:

    gasoline demand could be flat this year; most likely falls

    he also said current environmental legislation under consideration may set a potentially impossible task of producing cleaner fuel and reducing carbon emissions at the plants. may make the industry uncompetitive.

  39. 39
    zman Says:

    agree with Jon Najarian in #35 above.

    Anybody see broker news re EOG which is now up 5%?

    Nat gas make a run lower again. Crude back to up a dime and all products lower. Anybody want my VLO $65 march calls for a dime?

  40. 40
    Sambone Says:

    #39 – Nope

  41. 41
    Sambone Says:

    12:45 pm EST

    Nymex Crude Climbs Back Above $109 A Barrel

    From Dow Jones Newswires
    From Market Talk:
    [Dow Jones] Nymex crude has jumped back above $109/bbl in choppy trading. The benchmark futures contract had slipped earlier on a stronger dollar, which itself had regained ground from the Federal Reserve’s latest efforts to alleviate the credit crunch. But market participants aren’t sure what impact Fed’s action will have on inflation, thus keeping interest in hard assets like crude. “I think we’re in a tug of war here,” says Mark Waggoner, president of Excel Futures. Nymex Apr crude +$1.11 at $109.01/bbl. (greg.meyer@dowjones.com)

  42. 42
    Sambone Says:

    Uncle Phil

    http://www.321energy.com/reports/flynn/current.html

  43. 43
    zman Says:

    Sam – yea, me either.

    Oil bouncing around like a yo-yo. Can’t raise Nicky but this is her kind of market.

    CHK back to $45 here. May turn loose of the lower strikes and hold the March 45s to see if this has legs tomorrow.

    HK – looking for lots of detail at their analyst meeting tomorrow after the dearth of detail on the 4Q conference call which left the Street at a loss for commentary. If we get a upward revision to guidance I plan on selling the $15 March calls and letting the April $20s run. From a technical standpoint, good news could take the stock through the $19 which it has tried and failed to pierce three times since last Fall.

  44. 44
    zman Says:

    Nat gas a dime plus and falling into the close. Stocks could care less which is exactly the scenario we want.

    APC back to the races, EOG, CHK, NFX, HK all acting right today.

  45. 45
    reefguy Says:

    ng gonna be flat at close, oil up .75

  46. 46
    Popeye Says:

    DRYS up ~6% as well but it is still off > 10$ since last week.

  47. 47
    zman Says:

    Popeye – I have Capesize hole in my portfolio over that. 🙁

  48. 48
    Popeye Says:

    Z – we are in the same boat.

  49. 49
    zman Says:

    Here’s to hoping you hold a healthy does of the gassy E&Ps to offset.

  50. 50
    zman Says:

    Back to this all or none trading. Today they like energy, quite a bit more than the rest of the market. Not my favorite although after the last few days I’ll take it. HK setting up for a big breakout tomorrow.

    Scoop – those sell rules are coming soon, I have not forgotten.

  51. 51
    kyleandy Says:

    boat is crowded i’m in too

  52. 52
    scoop006 Says:

    if I board that boat believe me I’ll sink it

  53. 53
    ram Says:

    SAMB – What is your take on this straight up move?

  54. 54
    zman Says:

    back in 30

  55. 55
    T-Tupp Says:

    does it concern anyone else that we touched the jan intra day low yesterday on low volume? that part that concerns me is that the VIX was 25% lower than on that occurrence.

    oh bearer of bad news i am. but all this liquidity is going to banks who don’t want to lend to anyone.

  56. 56
    Sambone Says:

    Ram – I’m watching with amusement. The Street (Crowd) now believes that everything is OK, because B52 Ben is taking all the Bad bad paper off the banks bottom lines. So with that, credit will flow, lending will begin again, and the sky is blue. If you read the loan, it starts at the end of the month and it is good for 28 days. Ben is not taking it off their books, just lending against it. Remember, there is a lot of $ out there looking for a home.

  57. 57
    T-Tupp Says:

    does anyone know how to get the volume for the S&P 500. my index charts only give me the volume for ^INDU….

    hey Z, last night on fast money they had on a guest chartie, and they showed a chart of CHK. mentioned the B/O of the multi-year base.

  58. 58
    T-Tupp Says:

    ram- so they are letting them borrow from the FED using the asset backed paper as collateral?

  59. 59
    Denise Says:

    Good afternoon-Sambone-looks like a vicious bear market rally that might continue for a few days

    My T/A lady pointed out last night put/call ratio’s had been over 100 for last 10 days(very rare)
    We are very oversold-

    She posted this am that we will not be overbought until the fed meeting

    The wave guru i read says if we close over spy 1310 the rally could continue

  60. 60
    ram Says:

    SAMB – Thank you for your words of wisdom. I agree with you and am wondering how long this bear market rally will last to unload short and long term stuff. My hoard of common circulated morgan dollars is actually worth something.

  61. 61
    Sambone Says:

    Gone to Lacrosse game

  62. 62
    Denise Says:

    If anyone is interested-
    Doug back buying Dug
    Mr Kass is now going back to buying Dug(just posted) He thinks energy due for a correction or as he stated”succomb’s to growing economic weakness”
    Might be a bit of a theme
    Also Todd Harrison(Minyanville) posted this am he was buying driller puts

  63. 63
    ram Says:

    T-Tupp Only our gov. has the capability of holding the bag eventualy. This short term holding the bag could turn into “we will hold the bag and print as much money to cover – so there”. That’s why I am glad to hold an imbalance of precious metals.

  64. 64
    Denise Says:

    Here is an interesting 100 year Dow chart by Tuttle Asset Mgt- puts things in perspective –
    http://www.tuttleassetmanagement.com/index.php/site/strategy/100_year_dow_chart

  65. 65
    zman Says:

    D – The one thing I’d point out is that energy stocks have not been marking the move in crude tick for tick. Estimates on the group are rising which is something you can’t say about the rest of the S&P 500. So betting on a pullback in oil might be better served by a more focused instrument than DUG, the components of which have actually gotten cheaper on a forward earnings basis since the start of the year. Maybe USO or better yet crude futures for a short on crude. I’m loath to call a top as I think equities are not on solid ground yet which is what I think it will take for people to redistribute capital back away from the commodities.

  66. 66
    bill Says:

    coming out of my bomb shelter for fresh air..

    drys up 7 to 67.50.. never thought id feel good at this price. the whole sector is up along with the market

  67. 67
    Denise Says:

    Is Nicki around? I am belatedly catching up on my reading and saw Mr Cooper posted last night we might have traced down 5th wave on spy?- Was wondering about your thoughts?

  68. 68
    zman Says:

    DRYS up $7 …just what it lost yesterday.Go figure.

    EOG up $7, nice.

    Nicky = MIA. Has had connection problems of late, out banks.

  69. 69
    Denise Says:

    Z- no one can short USO (for last two wks I think) no shares to be had
    All these hedge funds buy the baskets now-Dug is alternative I would guess

  70. 70
    reefguy Says:

    Ioc- March options expire in 10 days…ELK 4 is MIA

  71. 71
    zman Says:

    USO was thinking puts if you were so inclined.

  72. 72
    Denise Says:

    Wow! When is the last time we saw a move like this?
    Thank Goodness I was not short(except UNG)joined you Z

  73. 73
    bill Says:

    apologize to all as ive been in ostrich mode for last day and a half..i couldnt take the pain of watching

    the bdi is out later than normal due to daylight savings change on sunday

    someone posted something about a seconday. what its called is a controlled equity offerring which allow then to sell shares from time to time as they need it.

    they had one on the self for6 m shares and they sold 1.1 m shares last year leaving 4.9 m remaining. well after the close on friday they announced they sold 4.2 of that 4.9 starting on 2/22 at an avg of 76. Thats 8 trading days avg selling 350 shares per day into the soft down market. Z & myself had a couple exchanges wondering why it was weaker than the rest. They started selling the day after the earnings release starting in the mid 80’s and continuiing.

    Well, one has to wonder why do they need 322 m in cash given ebitda is going to be greater than 800 m.

    Well the 8 k discussing q4 has a interesting little note that drys pick up an option to purchase 2 drillships for 1.3 b for 20 m. the option expires 3/23

    obviously they didnt spend the 20 to let it lapse, so i expect them to exercise that and its customary to put 20 % down on contract award

    the ceo last to invest other peoples money.

    thats why i asked you about drilling ships..i think this can go down to 10,000 feet

  74. 74
    Denise Says:

    Thank you Bill-I am painfully long drys
    nice to have explaination

  75. 75
    zman Says:

    Bill – Re DRYS. yea, its a shelf filing. It just gives them the ability to sell new shares or issue debt from time to time as they see fit as opposed to a regular secondary. Companies do it all the time and it does not commit them to doing the whole deal. good thoughts on the stock activity since earnings, which was probably the best opportunity they’ve had since the Fall (better to sell at higher stock price than low).

  76. 76
    bill Says:

    here is something i wrote on yahoo

    http://messages.finance.yahoo.com/Stocks_%28A_to_Z%29/Stocks_D/threadview?m=tm&bn=24683&tid=93201&mid=93432&tof=101&rt=2&frt=2&off=1

    and this

    http://messages.finance.yahoo.com/Stocks_%28A_to_Z%29/Stocks_D/threadview?m=tm&bn=24683&tid=93428&mid=93428&tof=-1&rt=2&frt=2&off=1

  77. 77
    zman Says:

    Thanks Bill.

    Off to soccer, catch you cats after while.

  78. 78
    bill Says:

    denise, i hear/feel your pain

    a big dividend would change this stock from a momentum play to a dividend/growth play but i dont expect that to happen

    I don’t like this volitility and if i can get another 20 points im going to cut it loose or sell deep in the money calls on every share i own

  79. 79
    bill Says:

    2 final things

    1> what was so frustrating over the last 3 weeks is that the fundamentals and rates were better each day yet the stock fell from the 80’s to 60.

    2. today the rates were slightly softer yet it rises 7 bucks with the dow move.

    so short term, its the market moving the stock and recesion fears, and anything else thats perceived in the marketplace.

    i saw an analyst that blamed the higher cost of oil for the bulker problems –In actuality , that’s a pass thru expense to the charteror

  80. 80
    bill Says:

    http://biz.yahoo.com/rb/080311/valero_npra.html?.v=1

    valero selling refineries

  81. 81
    Denise Says:

    Chuckle for the day

    http://www.foxnews.com/story/0,2933,336817,00.html

    And some statistics of interest from N Conley -Today’s 3.7% rise in the S&P 500 ranks as the 33rd-best single trading day for the market since 1950. Not bad considering that we have booked over 14,600 trading days over the past 58 years.
    In looking at the 32 previous examples in which the S&P ramped by 3.7% or more in a single day (for the purposes of this study, I call these “huge up days”), most of these examples occurred at or near the end of bear markets. Specifically, 18 of the prior 32 days with gains of 3.7% or more occurred in late 2002, late 1998, late 1987 (post-Crash), and late 1974.

    On the other hand, a significant minority of the previous 32 huge up days represented “fake-outs” in the midst of a longer bear market. Examples of these fake-out moves include the 6 huge up days that occurred from March 2000 through late 2001.

    If you’re a bull, you might hope that today’s single-day rally ends up rhyming with the late 1982 market. On 8/17/82, the S&P rallied 5.79% (its 11th best single day gain since 1950). In the subsequent 60 trading days, the S&P rallied a further 29.46%.

    If you’re a bear, you should be wishing for a reprise of the May 2002 rally. On 5/8/2002, the S&P 500 rocketed by 3.75%. But it was premature to call the end of the 2000-2002 bear market, and over the next 60 trading days, the S&P got blitzed by a 20.63% decline.

    As a whole, huge up days tend to lead to a positive trading bias over the subsequent 60 trading days. The average 60-day return after huge up moves 3.60% (median return was 4.52%), compared with the full sample average of 2.07% for all 60-day periods.

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