16
May

TGI Expiration Friday + Some WildZ Dry Bulk Trade Thoughts

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In Today's Post:

  1. Holdings Watch - been busy raising cash
  2. Commodity Watch
  3. Stocks We Care About Today - Drybulkers WildZ thoughts
  4. Odds & Ends

Holdings Watch:

  • (DO) - Added DO June $140 calls for $3.50 with the stock up $4 on a positive broker call on the deepwater group. I'll probably sell the $150 calls I have if this rallies further.
  • (EOG) - Sold my June $140 calls for $5.20, up 33%. I'll reposition later on an energy red day.
  • (SLB) - Entered the $110 June calls for $1.45.
  • (FTO) - Entered FTO June 22.50 calls (FTOFX) (on the mid for $3.90) as per recent refining segment comments on Tuesday.
  • (COP) - Sold the COP $90 May calls for $0.21, down 72%.
  • (NBR) - Sold the June $37.50 calls for $3.00, up 111% to my average cost of two purchases made in mid April. I still hold the June $40 calls here.
  • (HK) - Sold the June $25 calls for $2.55, up 96%. Still holding the June $30 calls and am likely to add back lower strike or longer dated calls on weakness. I want to maintain exposure here to news events but felt it was time to take the bulk of my capital here off the table. Maybe I'm a little early on this call but I can live with that and I can always buy it back.

Commodity Watch:

Crude Oil: traded flat yesterday after Congress voted to close the so-called Enron-Loop by granting regulators greatly ability to monitor speculative trade in crudes. There was a brief sell off mid day during an already volatile, option expiration influenced session, but the dip buyers saved it by the close with crude ending down only $0.10 to $124.12. This morning crude is trading up $1.50 to $2+ in the very early session.

  • Nukes For The Kingdom Watch: "The US and Saudi Arabia have agreed to cooperate in safeguarding the kingdom's energy resources by protecting key infrastructure, enhancing Saudi border security, and meeting Saudi Arabia's expanding energy needs in an environmentally responsible manner," a White House statement said according to Reuters. To this end, the two countries will sing a memorandum of understanding regarding the "peaceful development" of nuclear power in Saudi Arabia. Iran is likely to be, um, upset and tensions will likely drive oil to new highs soon.

Natural gas traded off $0.20 to close at $11.40 today as the EIA reported gas inventories saw injections of 93 Bcf. 

  • The Street was looking for an 89 Bcf injection and
  • I was looking for a somewhat larger 95 to 100 B's to be put into storage.
  • Gas was already weaker on the day and traded as low as $11.14 before it rebounded with a recovery in crude oil.
  • Click here to see last night's gas storage graphs.
  • This morning gas is trading up $0.10 to $0.15 with the morning rally in crude.

Stocks We Care About Today:

 

dry-bulk-multiple-051508.jpg

Dry Bulk Thoughts Watch:

Cautionary Note: At the end of each option expiration period I get a number of emails prompting me for WildZtrades, those last last minute, high high risk and sometimes high reward trades in the hours before Friday's closing bell.  I reject 95% of them as generally what looks good the morning of options expiration day looks like a pinned stock by lunch and is thoroughly disheartening by the close. Besides I can't have people calling me a day trader, it just won't do. The trades are known by some around here as "hate your money trades" with good reason.

  1. I've been away from the dry bulk sector since shortly after 4Q results came out, beat expectations and left shareholders holding an over inflated bag. Since then I've been watching the group move first without conviction in wild momentum stock type fashion and more recently, upwards as day rates jumped (see bottom of the table above and/or click here and scroll down for a graphic of day rates).
  2. Today I am considering two of these trades, both of them which fall into something a little better than the typical roulette category.

    • (EXM) - I like the June calls running into but not held through the close today. Why pick June and not May? Because I think there is a high probability that the drybulk group has out-run expectations, and since this group falls into momentum stock territory I'm not alone in that thinking. The names here could reverse on a dime while I'm getting a cup of joe. In that event, June calls give me a last chance to be saved by the earnings report on Monday Morning. I'll look at specific strikes once the market has opened and may not do the trade at all.

    • (DRYS) - This one I like as a hold through EXM's earnings Monday morning, again with June calls, but to be sold prior to its own earnings release after the close on Monday. Ideally I'll take half off the table before the close today, assuming I buy them at all (a ZBLAST email will go out when/if I do), and ride the remaining position through EXM's first quarter of combined results following the QMAR acquisition. This is slightly riskier than the EXM trade above and up there in real gunslinger territory.

    • The standard exculpatory language applies to this and everything I talk about here but now you know what I was thinking at 4 am this morning. These trades are by definition in the high, high risk category in my opinion and I won't do enough to hurt my self if either or both scud out (that's vernacular around here for going to $0 for you new folks). 

Brazil to Delay Further Offshore Lease Auctions.  Brazil's Energy Minister said that further lease sales would be delayed until at least 2009 due to a lack of rig and equipment capacity to drill up what companies already have in their lease inventories. That's good news for PBR as they race to add rigs and drill up their inventory since they won't have cash rich companies like XOM buying and sitting on leases neighboring the recent discoveries.

 

Odds & Ends

Analyst Watch: (APC) upped to overweight by Lehman and cut to hold at FBR. Lehman has missed the cycle here and in many E&P names and is now playing catchup. Broadpoint starts (CLR) at Buy with $60 target. More to be added in comments.


164 Responses to “TGI Expiration Friday + Some WildZ Dry Bulk Trade Thoughts”

  1. 1
    zman Says:

    Oil up $3 to $127+

  2. 2
    zman Says:

    LONDON (MarketWatch) — Goldman Sachs on Friday raised its forecast for the average price of West Texas Intermediate oil in the second half of 2008 by 32% to $141 a barrel from $107 a barrel. “We believe that the market is not defying fundamentals but rather experiencing a structural repricing much like it did in 2004, searching for a new equilibrium against an uncertain long-term supply environment,” the broker said. It added that long-term oil prices will need to continue to rise to bring trend oil demand growth in line with trend supply growth, which stands at around 1% a year. It added that long-dated prices will need to rise on average by 14% above current levels to $148 a barrel.

  3. 3
    scoop006 Says:

    Z- With oil up $3 think COP sees $90 today

  4. 4
    zman Says:

    Scoop – yes, sold mine yesterday. We’re in for a strong opening across the board, coal, E&P, oil service.

    NBR breaking towards record territory,

    My PRB May calls may get saved

  5. 5
    Nicky Says:

    So the Goldman boys were long and had their metal tested when we hit 121 did they???? What better way to sort it but come out with yet another upgrade on oil prices! The second in two weeks – when did they last do that??? This is blatant market manipulation and honestly why these guys aren’t investigated I just don’t know. The government are kidding themselves if they think they are in control here – GS are running the country. Well kudos to Joe Kernan on CNBC who pretty much said well GS are long oil and they need the price up so bring out another upgrade. He did add they needed to make money however they could.
    TA wise will this be the GS super spike? For sure they are going rush to buy this at the open but be on guard for a pop and drop as GS no doubt exit gracefully!

  6. 6
    Sambone Says:

    8:37 am EST

    Goldman Hikes 2H Oil Forecast To $141

    Dow Jones Newswires

    LONDON — Analysts at Goldman Sachs have raised their average WTI oil price forecast for the second half of 2008 by $34 to $141 a barrel, as the effects of a slowdown in long-term trend supply growth feeds into oil prices.

    “Our analysis suggests that long-dated prices will drive spot prices on average 14% above current levels,” Goldman analysts said in a note Friday, explaining the upwards revision to their previous forecast of $107 a barrel.

    Policy restraints on the free flow of capital, labor and technology resulting from resource protectionism have ultimately slowed long-term trend oil supply growth to 1% a year, they said, at the same time global GDP growth has accelerated to 3.8% a year.

    “Given this imbalance, long-term oil prices will need to continue to rise to bring trend oil demand growth inline with trend supply growth.”

    —By Nick Heath; Dow Jones Newswires

  7. 7
    zman Says:

    Nicky – they are getting pretty short term trade oriented as they said a month or so ago $85 in 1H08 and then higher. You do have to wonder how the Chinese wall is functioning over there at this time.

    But as to them doing this today, on expiration day, all I can say is thanks Goldie!

  8. 8
    Nicky Says:

    I don’t buy that Z – their $150 – $200 forecast was only a week ago. They are just manipulating the market to their own end. Can’t blame them but its still disgusting that they get away with it. The market will expect to see the same huge run up that we saw a week ago on their announcement and instead you see the big boys offload to the small fry who basically get their head handed to them on a plate.

  9. 9
    zman Says:

    I’m pretty sure about 4 to 6 weeks ago GS said look for a pullback soon before prices rally in the second half. Oil dipped and I’m sure they were buying any weakness knowing they would soon key it back up.

  10. 10
    zman Says:

    XCO ups capex budget as expected. $123 mm increase to $923 million for 2008. Lions share of the $ goes to Haynesville Shale exploitation ($90 million) – says for added leases and vert and horiz. wells.

  11. 11
    Dman Says:

    It seems W must have read my tirade yesterday about begging, LOL. From the Reuters piece mentioned above, begging isn’t the only tactic he’s using: he’s turning up in the Gulf with a grab-bag of goodies for KSA. But what goodies does he expect to come away with in return?

    Also, this idea of nuking-up the Kingdom (“in an environmentally responsible manner”. Yeah, right) seems like a concession that they can’t stop the Iranians so they will allow KSA to act as a strategic counterweight. At any rate, if they say Saudi nuclear power is OK, it makes their case for action agianst Iranian nuclear power harder to sell. So again, it looks like they’ve given up.

    Maybe W’s quid pro quo for nuking-up KSA is that W gets to have a nuked-up KSA, if you see what I mean.

  12. 12
    zman Says:

    I guess he thinks better GE get the reactor contract than France or Russia

  13. 13
    uop Says:

    zman:

    GM

    I see you disposed of jun HK,
    any particular reason,

    I have sep25, jun22.5,

  14. 14
    Dman Says:

    Z – #7 the old Chinese walls… when combined with Chinese whispers…er… well it works out just right, I’m guessing.

  15. 15
    zman Says:

    Uop – just raising a little cash yesterday. I kept my June 30 calls and said I would add the position back on weakness.

  16. 16
    zman Says:

    Drybulks bid up huge.

  17. 17
    zman Says:

    I don’t see how the broad market can stomach $130 oil. We’re up $3.60 now at 127.70 and you know where they want to go.

  18. 18
    Dman Says:

    #17 so oil/gas up, market down, who wins the tug-o-war for our favourite stocks?

  19. 19
    zman Says:

    all of them at the open but then, impossible to say. Bet we see some profit taking early.

  20. 20
    zman Says:

    DRYS opening up $5, watching it and EXM and the rest at the open.

  21. 21
    Nicky Says:

    I agree Z – I don’t think the broader market can take oil up here. If oil gets much closer to 130 then the indices will tank imo.

  22. 22
    Sambone Says:

    #17 – As I said yesterday

    “The market does what it does cause magical pixie fairies wave their wands and shout meka-leka-hi meka hiney ho.”

  23. 23
    Nicky Says:

    Phil Flynn FINALLY long oil. If ya listening Phil didn’t mean to refer to you as small fry….!!!
    Watch him start talking it up again now….

  24. 24
    zman Says:

    Nicky – what’s his argument for being long now since he skipped town at $97?

    Service names on fire, for once I can say I’m glad to be long DO. SLB up almost $6 since purchase yesterday afternoon. That’s pretty quick and very lucky and I may put it back into longer dated NBR which is trickling towards a high here if it will just hit about $110.

    Market looking a bit worried here, dry bulks coming back off open highs.

  25. 25
    Nicky Says:

    He just happened to have a buy order in at 121.00 yesterday. Talking Russia and says he doesn’t understand the craziness in oil at all.

  26. 26
    isleworth Says:

    PQ on the move today……….. šŸ™‚

  27. 27
    zman Says:

    X – through $180.

    I’m up over 10% on the options portfolio today with a substantial % in cash. Anytime that has happened in the past, it has been time to lighten up.

    RE: PF – ok, that seems honest, is he saying buy oil now for a quick trade then? He used to beat the same bull gong daily so I’m just trying to gage is he going back to that?

    Re PQ: just looking at that, big move on not a lotta volume. I’m holding what I have but may add a little more as that one is very cheap.

    PBR resurrecting my May $70 calls here.

    Uop – I think you said should have shorted SU. Don’t look now…

  28. 28
    zman Says:

    Anybody have experience with gigabit routers? Looking to upgrade as I’m getting a little data request overload. Got a favorite brand, thinking of going with a linksys.

  29. 29
    Jason Says:

    Hi Z – Wild Trade Idea – DUG May 28’s…even a little pull back in energy on profit taking could put you in the money here. Thoughts?

  30. 30
    BossmanG Says:

    Z, I haven’t had any problems with the linksys brand, but I bought a new router a month ago because the linksys one became outdated…bought a Dlink DGL-4500, I believe its the fastest router out
    Check out this site for any info:
    http://www.smallnetbuilder.com/component/option,com_chart/Itemid,189/

  31. 31
    BossmanG Says:

    I don’t use it for gaming, but its honestly the fastest router I ever have had experience with…very impressed with it

  32. 32
    Nicky Says:

    Lousy consumer sentiment numbers.

  33. 33
    zman Says:

    Jason – wow has that DUG trade everybody keeps trying not worked or what. If there was ever a time to try it its on a spike day like this. I’m not doing it but its probably a better than trying to take puts on SU.

    Bossman – thanks..will look into it this weekend, much appreciated.

    Re Wildbulktrades. Still watching, The may drys 110s represents a truly wild trade and I may do a little of that having looked at how the Junes shot up this am.

  34. 34
    zman Says:

    just watched that DQREB go from 1.10 offer to 1.40 bid in 1 minute.

  35. 35
    Nicky Says:

    Denise was saying yesterday that Doug K is heavily into Dug. Denise you around and does he have anything to say today?

  36. 36
    zman Says:

    NFXEM rallying with the common, some $ is better than no $ and I will punt if I see the minute chart stall. Doing well on the Julys there. Chart looks poised for a nice breakout off a month long based. We do have the potential for catalytic news here over the next few weeks. We also have them speaking at a conf next week (along with everyone else in E&P and service land) and they could mention Mancos shale results.

  37. 37
    sane Says:

    Re gigabit,

    I have a d-link 4300 /w gigabit and it works very well

  38. 38
    zman Says:

    is there a wireless option on it. I wire the office boxes but the laptop roves about a bit?

  39. 39
    BossmanG Says:

    Z, yes the DGL-4500 has wireless (up to new standard, N)

  40. 40
    zman Says:

    house is setup on that dude?

  41. 41
    zman Says:

    I only ask because you have witnessed the limit of my technical ability in this site and you’ll notice that I can’t get paragraphs to wrap around graphs.

  42. 42
    Nicky Says:

    President Bush in Saudia Arabia today talking to them about upping supply. Market would probably react bullishly if they did. Its pretty unlikely isn’t it after all their rhetoric?

  43. 43
    Jason Says:

    Re 33 – I’m with you on DUG Z…just trying to take advantage of the late morning profit taking pattern. Never shorting SU…1 RPG in the wrong zipcode and it’s to the moon.

  44. 44
    ram Says:

    I hope this is not a spike at open ad drift down.

  45. 45
    zman Says:

    I think they hurt the Cartel if they oblige Bush on this trip. It would be obviously payback for nuke-tech, just don’t see it.

    Jason, I hear ya. Pretty good bit of profit taking underway right now as the broad market sinks.

    Ram – could be, if I see a key reversal on oil I will raise so much cash your head will spin.

  46. 46
    sane Says:

    re 42

    Even if SA was to lift output they are not going to come out and say it. If we want more supply why don’t we buy that heavy crude sitting off the coast of Iran, oh wait we can’t d/t a 30 year old embargo.

  47. 47
    Nicky Says:

    Well no signs of a reversal yet Z – they may wait until the contract expires next week.

  48. 48
    Dman Says:

    Z – what do you make of reaction to the XCO news

  49. 49
    zman Says:

    Dman – its not news, been in the market since 1Q release.

  50. 50
    Dman Says:

    #45 I’ve seen a view expressed that the cartel is finished. They were formed to regulate prices & they can no longer do that.

  51. 51
    Nicky Says:

    I wonder what is likely to be the catalyst for a big sell off too. Seems they have thrown everything at it and nothing brings it down.

  52. 52
    BossmanG Says:

    Z, yes my house is setup for both wireless & wired (gigabit)….prefer gigabit, but use wireless for the laptop roaming

  53. 53
    xweto Says:

    Z: HKFE now at +100% on this spike … time to sl/rollover?

  54. 54
    zman Says:

    Xweto – I sold those yesterday and am only holding the $30s right now, looking for an entry a little lower.

  55. 55
    zman Says:

    Carris reiterates FTO at below average.

    Group seeing strongest profit taking of the day yet with oil “back down to $2.20”. I’d bet on one more good surge before pinning sets in.

  56. 56
    Popeye Says:

    IOC just crossed 30.

  57. 57
    reefguy Says:

    IOC- is the squeeze on?

  58. 58
    VTZ Says:

    Re: Nicky in #5 I agree completely.

  59. 59
    zman Says:

    NG down $0.15.

  60. 60
    VTZ Says:

    Bloomberg is going to have to change the nonsense headlines of their gas articles hourly now depending on the market.

  61. 61
    scoop006 Says:

    Z Just completed a major inventory reduction sale. Looking GREAT. Thanks again

  62. 62
    VTZ Says:

    Z – I was talking to a guy from Encana yesterday and the word/rumor is that after the split of the two companies a Conoco bid for the IntegratedOilCo comes within 6 months

  63. 63
    zman Says:

    VTZ – heard that as well and it would make a lot of sense from a current JV standpoint but do they really want to be the biggest refined products guy in North America. Right now their refining side is second only to VLO, I haven’t done the math but ECA might push them into the top spot in terms of throughput.

  64. 64
    zman Says:

    Should have bought the SU when the ECA deal was announced. The split makes it look very cheap on P/CF basis.

  65. 65
    kiaora Says:

    Well, the cold sweats were gettin’ to me! Went to 100% cash at 9am. Sitting on huge $$$ since march. Thanks Z

  66. 66
    zman Says:

    Took my ACI “off the books” trade off for anyone who is keeping track.

    Anyone with an Opco broker please send me the note on WH’s 1Q.

  67. 67
    VTZ Says:

    Suncor is going to look incredibly cheap on a P/CF basis once voyageur starts up.

  68. 68
    zman Says:

    Glad to hear it K. Will have some fresh ideas shortly.

    HK acting like profit taking time is at hand, give me another $1 down and I’ll be back with two fisted with September at the money calls, maybe one fisted with Junes as well.

    Going to take the hit on the Mays on the next rally in NFX (if any $ at all) and the PBR.

  69. 69
    uop Says:

    zman:
    what is two or one fisted ?

  70. 70
    Nicky Says:

    White House announces that Saudis will not increase supply as they see no demand. That you would think was bearish!

  71. 71
    zman Says:

    Uop – kind of the like the difference between like and like a lot. I’ll put more capital into the longer dated calls.

  72. 72
    Sambone Says:

    Who would have guessed?

    RIYADH (AP)–Saudi Arabia’s leaders are making clear they see no reason to
    increase oil production until customers demand it, the White House said Friday.
    U.S. President George W. Bush was in Saudi Arabia Friday to appeal to King
    Abdullah for greater production to help halt rising gasoline prices in the U.S.
    But his national security adviser, Stephen Hadley, said Saudi officials stuck
    to their position that they already are meeting demand.
    Hadley told reporters, “What they’re saying to us is…Saudi Arabia does not
    have customers that are making requests for oil that they are not able to
    satisfy.”
    Benchmark U.S. oil futures climbed to a new high on Friday, topping $127 a
    barrel.

    (END) Dow Jones Newswires
    05-16-08 1104ET- – 11 04 AM EDT 05-16-08

  73. 73
    zman Says:

    Could have saved the av-gas on the trip and just used the phone for that. I hate to say I told ya so, lol. No way they “publish” an increase. Time will tell via the tanker tracker firms if they up production or not.

  74. 74
    zman Says:

    ZTRADE: Added the CLR $55 June Calls for $2.49 average.

  75. 75
    Nicky Says:

    Its ridiculous – there is enough oil on the market why produce more??? Not that anyone cares about the fundamentals anymore.

  76. 76
    apbd Says:

    Big Sale Day at apbd’s. Inventory waaaay
    down.

  77. 77
    Dman Says:

    #72 Just who are the “customers” these jokers are always talking about? The whole world is addicted to the black crack but poor KSA can’t find any “customers” to make any “requests”!! Hilarious & a real class act that they can get away with it. Guess they’ll have to cry into their (non-alcoholic) beer with their enemies/pals/whatever the Iranians who can’t find an owner for their stray tankers of sour crude. No customers there either!

  78. 78
    reefguy Says:

    clr 55 june added at $2.50. Thesis is Bakken and Goldman equals $60

  79. 79
    zman Says:

    Kyleandy – nice buy at $7 yesterday on the WH. I’m almost even here. Gotta love it when an analyst botches his model like that and tanks a stock.

  80. 80
    zman Says:

    Reef- exactly. Three Forks Sanish test should have results prior to expiration of those but if it pops I’ll roll to a long position to be safe.

  81. 81
    Dman Says:

    Daily chart MACD voodoo-meter:

    swinging down for HK, CHK
    swinging up for NFX XCO NBR CLB

  82. 82
    elijahwc Says:

    Hi S

    On dry bulk rates.

    I’m going to share a better freebie resource with your readers:

    Go here

    http://www.investmenttools.com/futures/

    Scroll down to Shipping & Freight rates

    Find the one you want

  83. 83
    zman Says:

    Thanks Eli – that one is the second link on the transports tab.

    Dman – thanks. What, no OII on the list?

  84. 84
    zman Says:

    DRYS relaunching and I missed it.

  85. 85
    ram Says:

    ZOLT seemed to resolve its issues.

  86. 86
    Dman Says:

    Z – OII FTI NOV all mid-cycle in MACD up phase, so a bit premature there to say the MACD is swinging down. Much as I’d like to say it ‘cos I want/need to *get some more* of these critters.

  87. 87
    Dman Says:

    #85 yep, that sure looks like a resolution. Guess the money must have been safe and sound all along, just stashed in a bar fridge where no one noticed it šŸ™‚

  88. 88
    md Says:

    Did you see the Gazprom LNG Quebec announcement. National Post had article on front page but it’s not available on the net.

    http://www.theglobeandmail.com/servlet/story/LAC.20080516.RLNG16/TPStory/Business

    As per National Post:
    Daily capacity is 500 MCF
    “The plant will earn US$150Million in revenue per year while Gazprom expects to sell the gas for US$1.5 billion.

    Does this work out to $3 MCF
    Also,Compare to LNG Sabine Pass which earns $250 Million for 2 BCF.

    Why invest in LNG when all this new production coming onstream.
    I look forward to reply on the CQP LNG opportunity if any.

  89. 89
    kyleandy Says:

    z- WH i know thats your fav when analyst absolutely wrong!! am actually ahead even tho i started at 8.30. getting tempted to leave it.

  90. 90
    zman Says:

    md – I had not, TOT has a big piece of Sthockman, could be interesting.

    I’m not one to beat myself over a trade but if I were it would be yesterday’s COP sale. Wow. Talk about a day late and $2 short.

  91. 91
    Popeye Says:

    Following a link off investmentools for a little known (???) econ leading indicator using the Baltic dry index.

    http://slate.msn.com/id/2090303/

  92. 92
    apbd Says:

    COPER now almost as valuable as copper.
    apbd

  93. 93
    zman Says:

    Popeye – that’s pretty fun.

    If I had not taken FTO yesterday I would today, low volume sell off from a broker negative reiteration.

  94. 94
    zman Says:

    A – what can I say I’m a bonehead.

  95. 95
    zman Says:

    PBR testing $70

  96. 96
    Nicky Says:

    1414 is good support on spx – if it fails this could fall quite a lot more. If it holds we have another shot at the highs.

  97. 97
    apbd Says:

    RE: 94. Not my point. I was a bonehead also because I unloaded for a 50% haircut.

  98. 98
    zman Says:

    A – I didn’t take offense, but I was saying I was boneheaded for succumbing to the Feinstein two step yesterday. I’d send her bill but she’d just raise my taxes to pay it.

  99. 99
    Nicky Says:

    Good energy debate on CNBC about the fundamentals. Being argued that we have a billion in storage which is 7 months supply on its own. In his words we are awash with the stuff. Will just check who it was.

  100. 100
    Nicky Says:

    No missed who the debate was between but just caught the end and some pathetic woman arguing that we are almost out of oil and it had nothing to do with speculation. If there was ever a doubt then this mornings move tells you it is all about speculation.
    Anyway whilst support at 124.04 holds we go higher.

  101. 101
    zman Says:

    wiki tab updated.

    PBR calls looked to be getting pinned at $70 so the $70s go over the side soon.

  102. 102
    cadillac Says:

    I can’t beleive that the market as a whole isn’t reacting greater to the high input costs that are happening right now. It is so pervasive, oil, steel, food, raw materials…

    This feels to me so much like last October when the market knew that the banks where in deep trouble with bad assets but the market kept moving up.

    Eventually the input costs are either going to shrink profits or reduce sales…even in the “growing” global markets.

    I don’t think the market is going to correct another 20% because we already did that. But I don’t see how we can be above 1400 in the S&P. (I would be nervous about being in overseas equities which could really bust quickly)

    The question in my mind is, when will the final piece of straw be laid on the camels back?

    I’m not a bear by nature…but until oil and commodities come down how can the average joe make it?

    There just isn’t going to be a whole lot left in the paycheck.

    Just needed to get that off my chest.

  103. 103
    zman Says:

    ZTRADE: Out PBR May $70 calls for $0.31, down 50%. Still holding the June $67.50 calls.

  104. 104
    sane Says:

    Apartments key to home construction gain

    I wouldn’t call it a housing market recovery

  105. 105
    Sambone Says:

    Cadillac – I agree. If you are buying a truckload of widgets, the fuel cost is passed to you. So do you raise the price of the widgets or do you eat the cost? Most companies are eating the costs which do what? Lower earnings. That’s why I don’t watch the bubbleheads on CNBS, because all they do is cheerlead! Now I feel better!

  106. 106
    Nicky Says:

    Can someone tell me what day next week the June crude contract expires please?

  107. 107
    zman Says:

    Tuesday

    http://charts3.barchart.com/chart.asp?sym=CLM8&data=A&jav=adv&vol=Y&divd=Y&evnt=adv&grid=Y&code=BSTK&org=stk&fix=

  108. 108
    zman Says:

    Capital One started CHK at Add.

    Cadillac, good to hear from you, agree, seems like house of cards.

  109. 109
    Nicky Says:

    Cadillac – Shilling who i acknowledge is a super bear said last night that the next shoe to drop was the consumer and follow that by the rest of the world….
    I agree with your comments totally and the fact that it feels like it is October is very telling. The market internals have been awful on this move up. When it finally rolls over watch out below.

  110. 110
    Jason Says:

    Just heard on the radio Energy Dept. orders stop to SPR fill.

  111. 111
    Nicky Says:

    Thanks Z but where does it say on that page that it is Tuesday?

  112. 112
    Nicky Says:

    Scratch that last comment – seen it! Just having a blonde moment!!

  113. 113
    zman Says:

    Re #110 – Administration having a “I care about the little guy too” moment. Meaningless to the big picture but good sentiment. I would think traders would not care.

  114. 114
    Nicky Says:

    SPR is almost full anyway so no big concession on their part.

  115. 115
    Brian Smith Says:

    Cadillac – you are operating under the old paradigm that the US equity markets depend upon the prosperity of the US consumer. Now our markets are more dependent upon the prosperty of oversea’s consumers and markets. The Dow and S&P now reflect their economic fate more than the state of US consumers. It’s been my observation that the US markets rally on a falling dollar (which ultimately is not good for US consumers) and fall on a rising US dollar.

  116. 116
    Nicky Says:

    Big picture on broader market. Once we break below 11750 on the Dow which is a very significant level then there is a head and shoulders area that targets 9450. Add to that the significance of the fact that 11750 was the high in 2000 and once broken it becomes major overhead resistance.

  117. 117
    Nicky Says:

    Crude currently sitting on supporting trend line.

  118. 118
    cadillac Says:

    If it was just oil I think our economy could shake this off…The US economy is risilliant and has shown time and time again that it adapts.

    I just see too many “other” input costs that we use every day going through the roof.

    Last night my mother-in law came into town and she was talking about buying extra rice because she heard there might be shortages.

    This is a woman that has no idea about the market dynamics but she knows the cost to fill up her Buick is up and that she doesn’t want to run out of rice.

    The only commodity that is cheap right now is lumber…unfortuneately no one is buying houses and furniture right now…

    Until some of these commodity prices come down I just don’t see a full market recovery.

    On the brighter side…Employment is still good, interest rates are low, the banks are shored up,and we live in a country that can and will get through this stronger and more competitive than ever. (If the politicians stay out of the way).

  119. 119
    zman Says:

    looks like pinning action setting in many E&P and service names now. Going to have three scuds this month, one in NFX, one in TSO and then the UNG puts. Not terrible, not great and I can’t complain about the overall.

  120. 120
    Denise Says:

    Good afternoon,
    Mr K MIA today Nicky but he did a fast comment that he is all in short plus some(might be on margin) on the general market-I believe he is still long Dug

    Reading lots of rumors about margin raises on oil futures

    I agree Nicky this market has a bad feel
    getting shorter myself(although I have been wrong all week)
    At least retail is begining to make sense

  121. 121
    VTZ Says:

    Today seems to be bearish trading on NG considering crude.

  122. 122
    zman Says:

    VTZ – agreed, wonder when the powers that be start bottom fishing.

  123. 123
    zman Says:

    heating oil and gasoline outpacing the gain in crude as we approach the close of the week. Refiners may be starting to bottom.

  124. 124
    Denise Says:

    My ace T/A lady points out everyone wants to catch the top in oil and her in box is filled with daily Dug requests but no one asks about Dig-the worse you can say is correction it is within it’s channel(although steep)

  125. 125
    zman Says:

    I can echo the inbox comment on DUG. Lot’s of requests for analysis but I’m 99% FA, not TA and despite the runs, the energy sectors are not pricey to the market nor historic norms. I may take some as a hedge because the charts look extended but based purely on the fundamentals the stocks are discounting an oil price over $30 south of here right now.

  126. 126
    Nicky Says:

    Nat gas has support beneath 11.141 at 10.980-10.945

  127. 127
    Sambone Says:

    1:07 pm EST

    Nymex Oil Soars To High On Momentum, Distillates

    By Hyun Young Lee
    Of DOW JONES NEWSWIRES

    From MARKET TALK:
    [Dow Jones] Nymex crude prices shave about half off the sessions gains, slipping below $126/bbl after the record highs earlier in the session. The June contract jumped $3.70 to hit an all-time record of $127.82/bbl but was trading up $1.76 recently at $125.88/bbl. The market is moving mostly on technical indicators, which remain strongly bullish, though participants will want to book profits ahead of the weekend, traders say. (hyunyoung.lee@dowjones.com)

    OTTAWA — Crude oil futures marked yet another record high Friday, soaring toward $128 a barrel, as the market’s upward surge continued unabated.

    Feeding into this momentum, analysts at Goldman Sachs dramatically hiked their prices forecast for the second half of the year. Meanwhile, the ongoing strength in distillate demand provided further grist to the market’s mill.

    Light, sweet crude for June delivery was up $3.27, or 2.6%, at $127.39 a barrel on the New York Mercantile Exchange, after hitting a new record of $127.82 a barrel earlier. Brent crude on the ICE futures exchange was $3.29 higher at $125.92 a barrel.

    Thursday’s wild price swings briefly unsettled market participants, but they spied opportunity as Nymex crude settled down for the third time in four sessions.

    “There’s still a strong feeling that any dip in the market is an opportunity to buy,” said Gene McGillian, a broker and analyst at TFS Energy Futures in Stamford, Connecticut. “There’s a real fear that if you try to pick a top (to the market) and try to make some money, you immediately have to get out of the way…There’s nothing to take away the headwinds in this bull market.”

    He added, however, that crude was unlikely to close substantially higher, as investors would want to square their positions before the weekend.

    A report from Goldman Sachs earlier Friday added yet more fuel to crude’s scorching run. Analysts at the investment bank raised their average Nymex crude price for the second half of 2008 by $34 to $141 a barrel, citing restraints to long-term supply growth.

    Policy restraints on the free flow of capital, labor and technology resulting from resource protectionism have ultimately slowed long-term trend oil supply growth to 1% a year, they said in a note, at the same time global GDP growth has accelerated to 3.8% a year.

    “That’s a huge increase,” said Nauman Barakat, senior vice president at Macquarie Futures USA in New York. “And we’re not anywhere near those levels at the moment.”

    The revised forecast comes just a day after UBS economist Jan Stuart hiked the bank’s 2008 price forecast 32% to $115 a barrel, judging that supplies will fall short of demand.

    Meanwhile, robust global demand for distillates was continuing to drag energy futures higher. Heating oil futures are up about 16% in May, far exceeding gains in oil and reformulated gasoline blendstock, or RBOB. Demand for distillates, a category that includes heating oil, diesel and jet fuel, has outstripped supply recently in Europe and Asia, causing futures to skyrocket long after the usual winter peak.

    Some traders believe that China may increase its distillates imports in the wake of Monday’s massive earthquake, McGillian said, which is adding yet further momentum to prices.

    Front-month June RBOB was up 7.22 cents, or 2.3%, to $3.2380 a gallon. June heating oil was trading 8.42 cents higher at $3.7066 a gallon.

    —By Hyun Young Lee, Dow Jones Newswires

  128. 128
    Sambone Says:

    DOE Won’t Enter New SPR Contracts

    Dow Jones Newswires

    WASHINGTON — The U.S. Department of Energy will not enter into new contracts for the previously planned fill of the nation’s crude stockpile under a royalty program, the agency said Friday.

    The action follows a sharp rebuke from Congress earlier this week, with both chambers overwhelmingly voting to force the Bush Administration to stop filling the Strategic Petroleum Reserve. Lawmakers and industry groups have been concerned that the policy had been contributing to record-high crude and gasoline prices.

    The DOE has been filling the emergency reserve under the royalty-in-kind program, which accepts crude in lieu of cash royalty payments, at a rate of 70,000 barrels a day.

    It had solicited bids to increase the fill rate to approximately 76,000 barrels per day beginning on July 1, with deliveries of crude oil beginning in August 2008 and continuing through December 2008.

    The SPR has a capacity of 727 million barrels, with a current inventory of 702.7 million barrels of oil — around 97% of capacity — stored in the underground salt caverns located along the Gulf Coast of Louisiana and Texas.

    —By Ian Talley, Dow Jones Newswires

  129. 129
    Nicky Says:

    Denise – big sigh – we need the bears to throw in the towel to be honest. So get her to let you know when she stops getting requests about DUG.

  130. 130
    uop Says:

    zman;;is HK in the range to buy ??

  131. 131
    zman Says:

    I’m waiting for another point to come out of HK before I buy. I hold the $30s just in case news comes out before I add back the lower strike options.

  132. 132
    Nicky Says:

    WTI – at the moment we only have 3 distinct waves up off yesterdays lows. We need to take out todays highs of 127.82 before we take out 124.04 or there is a chance we test the 120 area again.

  133. 133
    zman Says:

    Saudi to boost output by 300,000 bopd

  134. 134
    Nicky Says:

    My God Z where has that come from when they earlier said they were gonna do nothing?

  135. 135
    zman Says:

    Saudi noted that the boost was to meet rising demand and to offset lower production from other OPEC producers (I’d bet on Iran).

    http://www.upstreamonline.com/live/article155024.ece

  136. 136
    Nicky Says:

    And still the market holds up…

  137. 137
    zman Says:

    Well, net-net you’re probably not talking about much of a pick up at all.

  138. 138
    uop Says:

    zman;

    oil up agian , same story, all energy related up, coal, solar,

    just took some $ off the table on PBR, BTU, DO,

    will buy back at lower prices.

  139. 139
    zman Says:

    …and the small size of the boost will feed arguments from guys like Matt Simmons that the Saudi’s just don’t have the capacity to spare.

  140. 140
    Nicky Says:

    Agree its more symbolic but getting the proverbial two fingers from the trading floor.

  141. 141
    Brian Smith Says:

    What are the odds that the Saudis can make good on that promise? Some, like Matt Simmons, think they are producing all they can now.

  142. 142
    Nicky Says:

    Also they state demand up so the bulls can have a feeding frenzy on that…

  143. 143
    zman Says:

    I think the two fingers were to Feinstein’s loophole talk yesterday. Agreed re demand. Brian, you and I were on the exact same page with that. More production from them now is going to be seen as bullish in light of the spare capacity argument. They are jamming crude up into NYMEX close.

  144. 144
    Brian Smith Says:

    I don’t have a shread of confidence in anything the Saudi say regarding their ability to increase production. Their pronouncements are about as reliable as our DOE pronouncements. Like Jim Rogers says, I don’t believe the economic pronouncements from any government. To wit, remember the CPI number from yesterday. We’re not living in 2008, we’re in 1984.

  145. 145
    Nicky Says:

    Yes but do they actually even need to produce anymore when is ample supply out there right now? I don’t hear anything about shortages just tankers sitting out in the Gulf full of the stuff that nobody wants.

  146. 146
    zman Says:

    Nicky – agreed which is what OPEC has been saying all along.

  147. 147
    scoop006 Says:

    Z Any WILDZTRADES on the menu?

  148. 148
    zman Says:

    No, I had the two in the post but lost my will to act on them though they are doing pretty much what I thought. One note, now that I punted my PBR it is back to the highs.

  149. 149
    scoop006 Says:

    I took a little action on FSLR & DRYS June Puts

  150. 150
    occam Says:

    Good time to buy a little more XCO June 25s?

  151. 151
    zman Says:

    Occam,

    I’m holding but not adding just yet. I don’t see anything wrong with adding but the stock and some of its gassy mid and small cap peers are still digesting the big recent gains they’ve enjoyed. I had been thinking about and decided I’d like to see Monday’s gas reaction to the past and future week’s weather data. I don’t think you miss much but the lost of time value for sitting out the weekend.

  152. 152
    zman Says:

    …I didn’t think that with regard to CLR earlier as its oily and has been resting, so to speak as well, and they almost turned it but at this point it looks like to close flat to lower as well.

  153. 153
    zman Says:

    I am surprised to see Bakken players WLL and EOG tapping new all time highs and CLR gettnig left on the sidelines, usually that doesn’t last long.

  154. 154
    zman Says:

    NBR in full breakout mode now, over $41 and still a cheap name.

  155. 155
    zman Says:

    Options Clearing Corporation lowering auto exercise margin from $0.05 to $0.01. This means that most brokers will now automatically exercise any option 1 cent in the money on Saturday unless you tell them not to. That can be ugly on Monday morning if you end up with stock you didn’t want in a down market. It is no way to start the week.

  156. 156
    zman Says:

    UBS reiterates buy on X

  157. 157
    Jason Says:

    Z – Tempted to raise any cash as the day closes? Nice runs all around.

  158. 158
    zman Says:

    Jason, always tempted to. But I have a good bit and am going into the weekend as is. When in doubt sell half never hurt me though.

  159. 159
    kaman Says:

    Z- re: #55 I thought that was just my Schwab acct, didn’t realize everybody has to play that way…agree it will mean staying on your toes right up til the fat lady sings.

  160. 160
    Sambone Says:

    Tini time

  161. 161
    zman Says:

    Nice week, closed at annual high. Have a great one, weekly wrap (in progress) out in a bit. Would you believe energy outperformed again, lol.

  162. 162
    Jay Reynolds Says:

    Best I’ve read on PMEX

    http://www.energyinvestmentstrategies.com/2008/04/08/pemex-the-disease-is-clear-the-cure-is-not-part-1/#more-434

  163. 163
    Freight Shipping Rates Says:

    Freight Shipping Rates

  164. 164
    tarquinio il superbo google traduzione online inglese Says:

    tarquinio il superbo google traduzione online inglese

    Zman’s Energy Brain ~ oil, gas, stocks, etc… » Blog Archive » TGI Expiration Friday + Some WildZ Dry Bulk Trade Thoughts

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