09
Jul

Wednesday Bounce

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Housekeeping Watch: Sometimes the system breaks down. And when the system breaks down, we DO NOT break down. Yesterday our hosting company had a major malfunction. All of their hosted sites were down (they tell me that's thousands) and it took them all day to fix it. I can yell and threaten with the best of them but what's the point. It's fixed now but this is the internet and the internet is an imperfect place. So please bookmark our backup site: http://zmanbackup.wordpress.com, which hosted by a different company than our main site, as we are absolutely never intentionally down. If you don't see the site or see a post during a non-holiday weekday something is broken and we are over there.  

In Today's Post:

  1. Holdings Watch
  2. Commodity Watch
  3. Technical Opinion Watch - a quick look at the XNG, XOI, OIH
  4. Stocks We Care About Today - What's CHK's deal?
  5. Odds & Ends

Holdings Watch: The Wiki Tab is updated.

  • (HK) - Added August HK $45 calls (HKHI) for $3.70.

Commodities Watch:

  • Crude Oil fell $5.33 to close yesterday at $136.04 capping a 2 day 9 point reversal after press headlines were filled with $150 price targets. This morning oil is trading up $1.50 to $2.00 on a smallish retrenchment in the dollar and ...
  • Iran Watch: Iran test fired a missile capable of hitting Israel last night.

EIA Oil Inventory Preview (estimates from the Bloomberg Survey):

exp-070308.jpg

ZComment: Any larger draw on crude stocks and my see $140 again pronto. The imports numbers have been running moderately strong for two weeks now and a fall off there back into the mid 9 mm bopd would not be surprising but would very likely contribute to a bigger draw down of crude stocks. Analysts are looking for flattish refining runs so again, no pick up to more seasonal norms due to a combination of high crude prices and questionable demand.  We also may see another slight pop in gasoline demand due to 4th of July related vacation plans which could send gasoline prices higher placing another leg of support under crude prices today. I think the news out of the EIA yesterday that OECD inventories continue to lag combined with the lower inventories in the States is more important for and supportive of crude than anything that will come out in today's release. By the way, the EU voted to begin releasing weekly inventory updates in a bid to give the markets greater transparency. 

  • Natural Gas fell $0.61 to $12.37 yesterday, marking a 2 day drop of $1.20 or 9% as a downdraft in oil and disappointment over the course of the season's first hurricane weighed. This morning gas is trading up slightly with the bounce in crude.
  • Tropics Watch: Bertha weakened overnight and continues to steer well clear of the U.S. There is another tropical wave coming off Africa that could be the next system to watch. 

Technical Opinion Watch: Thoughts on current levels.

  • XNG - The index of "gassy" stocks fell to support from late April/early May before bouncing late yesterday. The index peaked on 7/2 and fell 14% before a broad market rally induced a modest bounce late yesterday. I think we are due at least a 5% bounce in the near term as nothing fundamental has changed in the group or for natural gas and valuations remain low (now even lower). Earnings season begins in a little under 2 weeks and my sense is that the Street (via estimate, price target, upgrades and reiterations) and fund managers will start bargain hunting between now and then. 
  • XOI - Still looking sick. This index includes the Majors, some independent refiners and for some reason (APC). Anadarko aside, the fundamental here are not that great, especially for the indies. The chart was already sliding when energy fell out of favor last week and while the Majors have a shot at turning in respectable performance via their E&P divisions it is all commodity price based and I don't see a lot to get excited about. You note the slots under Majors and Refiner on the Wiki tab remain blank. While I made trade the gassier (COP) from time to time as it is the cheapest of those names right now I don't feel the need to play before warnings earnings season.  
  • OIH - The service names also turned in a 14% peak to trough 4 trading day loss before getting a nice bounce into the close yesterday. From a chart standpoint the OIH fell to the low end of support from a three month long rising base (not a TA term so don't look it up but you know what I mean) before the bounce set in. For the most part and especially for the components which drive service performance the fundamentals for oil service should improve in the second half, especially for the N. American focused companies (and that includes Mexico and Canada leveraged as well) as rig activity breaks out above 20 year highs on natural gas, strong oil directed drilling and record activity in horizontal drilling  (strong for both oil and gas) and everything that goes with said higher levels including tubulars, bits, mud, and related completion needs. Deepwater rates continue to rise as well and I will take a position in either (RIG), (DO), or (NE) into the 2Q. 

 

Stocks We Care About Today:

CHK Announces 25 mm share secondary.

  • Dilution: 5% assuming the shoe (3.75 mm share over-allotment) is exercised,
  • Raising $1.5 billion,
  • Use of proceeds: "temporarily" repay indebtedness.

  • Why do it now? I agree with the surmises of some readers last night that the play is better than (CHK) has disclosed. Unlike a majority of a E&P companies they do their core analysis in house which gives them the advantages of speed and privacy. They mentioned on the call that having achieved their initial 500,000 plus acres they would not stop but would continue acquiring acreage and since they believe there is core acreage and then there is all the other, less prospective moose pasture there is no time like the present.
  • Why Not Package The Recent Haynesville Shale News With The Secondary Announcement? Would you in their position? Probably not. You'd want the stock to run, as it did to get the highest price for those new shares. They addressed well costs, acreage to hold the leases and drilling plans but left open their appetite for more acreage just saying that they continue to lease. I had thought that 
  • Acreage - how many wells does it take to hold their current 550,000 acres?  860. That's with 1 well holding each section  (square mile or 640 acres) as per Aubrey's comments on the last CC. They should be able to accomplish that sometime during 2012 assuming they reach their year end target of 60 rigs by the end of 2010. Each rig should be able to spud 6 wells per year giving them at least 360 wells per annum assuming no drilling efficiencies which will not be the case as they never drilled their best, most efficient or cheapest well at the beginning of a play.
  • What Will It Cost? If you look at drilling costs alone and forget further acquisitions then we are talking about $6.5 mm completed well cost initially, that's a total drilling cost of $5.6 billion to drill up and hold the acreage on a gross basis. That falls to $2.2 billion when you take into account their carried interest from the (PXP) deal.  
  • Didn't They Just Do A Deal? Yes, on March 26th they announced a secondary offering raising a little over $1 B at around $46 per share, having broken the Haynesville news on the 24th. And then the stock went on to break $70. So far, Chesapeake has invested about $2.5 billion in the Haynesville Shale. The PXP deal and current leasing activity values (CHK)'s acreage position at $16.5 billion. I'd take that trade all day long.   
  • In A Nutshell: I'm a little surprised they announced it today after the beating the group and their stock has taken from recent highs. Especially in light of the $1.65 billion they just took in from (PXP) and the roughly $1.5 billion I expect to hear about in asset monetizations potentially as soon as the 2Q call (July 24). Another bout of short term pain for shareholders as they continue to roll ahead with acreage acquisition, I presume a majority of which will be in the Haynesville. I could have done without this as I'm long July calls which will get crushed at least initially but after a brief bit of pain, I expect the stock to recover fully and retest its recent high probably in the next two to three months.

(OII) Awarded Shell Contract. Undisclosed sum for contract work in water depths ranging from 7,800 to in excess of 10,000 feet at Shell's Perdido project in the Gulf of Mexico. I plan to roll to longer dated contracts here in the near future. 

(GDP) Secondary Priced. At $64, stock is already recovering.  

 

Odds & Ends

Analyst Watch: (OII) upped from add to buy at Calyon, (RIG) upped to overweight at JPMorgan, (SLB) added to Focus List at JP Morgan. 

 

 

149 Responses to “Wednesday Bounce”

  1. 1
    zman Says:

    test test test

  2. 2
    Sambone Says:

    Headline – CHK sees substantial 2Q losses from hedging.

  3. 3
    Sambone Says:

    CHK – Trading at $59.25 premarket

  4. 4
    Sambone Says:

    DOW JONES NEWSWIRES

    Chesapeake Energy Corp. (CHK) disclosed its responses to comments from the
    Staff of the Securities and Exchange Commission related to its 2007 annual
    report and its 2008 first-quarter financial report.
    The company said in a document filed with the SEC that the Staff comments
    inquired about certain of its disclosures and solicited supplemental
    information.
    Chesapeake Energy submitted its responses to the comments on June 13 and
    believes that the disclosures and financial statements in the filings in
    question comply with applicable SEC regulations.
    The ultimate resolution of the comments could require an amendment to the
    filings under review or a change in the company’s disclosures in future
    filings, according to the filing.
    In a separate SEC filing, Chesapeake Energy said it expects to incur
    additional substantial unrealized losses in the second quarter as a result of
    its hedging activities.
    In the first quarter, the company said it $1.1 billion of unrealized losses
    associated with mark-to-market changes in the value of outstanding hedging
    contracts.
    During 2006 and 2007, the company said it earned $2.5 billion in additional
    revenue as a result of hedging activities.
    This year, however, natural gas and oil prices have increased dramatically
    relative to the level at which it has hedged a significant portion of its
    production.
    Chesapeake Energy expects the losses could result in it reporting negative
    revenue from natural gas and oil sales and will result in an overall net loss
    for the second quarter, the filing said.
    Shares of the energy company closed Tuesday at $61.55.
    -By Chad Clinton, Dow Jones Newswires
    Dow Jones Newswires
    07-09-08 0644ET

  5. 5
    zman Says:

    The CHK headline is a non-event. Its an unrealized hedge loss that is well known and does not impact cash flow but they do have to report it.

    Stock is off on the secondary offering.

  6. 6
    Sambone Says:

    7:32 am EST

    Crude Rebounds Geopolitics, DOE In Focus

    By Angela Henshall
    Of DOW JONES NEWSWIRES

    LONDON — Crude oil futures traded higher in London Wednesday rebounding after a heavy sell-off in the previous session, and gaining further ground on news of missile testing in Iran.

    Oil prices bounced in Asian trading hours after heavy selling in the U.S. session saw crude oil post its largest single-day drop in dollar terms since the first Gulf War.

    Market participants also cited Iran’s testing of a long range missile during military exercises as an excuse to buy, Andrey Kryuchenkov, analyst at Sucden said.

    “Geopolitical tensions have always been there…but the missile test has given the market an excuse to buy the dips,” Kryuchenkov added, although he expected the U.S. Department of Energy statistics and dollar moves to be the key drivers Wednesday.

    At 1100 GMT, the front-month August Brent contract on London’s ICE futures exchange was up $1.86 at $138.29 a barrel.

    The front-month August contract on the New York Mercantile Exchange was trading $1.48 higher at $137.52 a barrel.

    The ICE’s gasoil contract for July delivery was up $30.00 at $125.275 a metric ton, while Nymex gasoline for August delivery was 537 points higher at 341.68 cents a gallon.

    Extreme volatility persists for oil prices, while last week the market looked primed for a run at $150 a barrel, by Tuesday the bulls were scrambling to defend the low $130s. Although the latest sell-off will more than likely mark a minor correction in a major upward trend.

    While independent oil market analyst Stephen Schork describes Tuesday’s slide as impressive, “it is by no means in and of itself a sign that the current bubble in oil has burst.” Referring to technical charts Schork added the relentless march higher for Nymex light sweet crude “has been defined by a series of prolonged upward drifts, interrupted by brief, albeit violent, pullbacks.”

    In the run-up to summer driving season all eyes are on this week’s U.S. inventories report at 1435 GMT, which is expected to set price direction for the remainder of the week, according to traders.

    After last week’s sixth draw for crude stocks out of the last seven reports, inventories have reached their lowest level since January and are again seen declining this week by 1.4 million barrels according to a Dow Jones Newswires survey of analysts.

    The analysts on average anticipated gasoline inventories to increase by 200,000 barrels while stocks of distillates, which include heating oil and diesel fuel, are expected to rise by 1.9 million barrels.

    Harry Tchilinguirian, analyst at BNP Paribas, said if the U.S. weekly data show crude stocks stabilizing or increasing, then the market will focus on product builds.

    “These can provide the bearish motives for further corrections in the short run,” said Tchilinguirian. “But if crude stocks sink further, then prices will be supported to the upside again.”

    The International Energy Agency issues its monthly report Thursday, and market participants expect “more evidence,” that the global economic slowdown is impacting U.S. energy demand said Mike Wittner analyst at Societe Generale.

    Wittner anticipates further downward revisions to demand forecasts for the second quarter, plus, based on recent data from Mexico and Russian, a modest downward revision to non-OPEC supply.

    —By Angela Henshall, Dow Jones Newswires

  7. 7
    Wyoming Says:

    Z,

    Not sure about the 1 well for 640 acre number. That may be true for Fed/BLM leases but I would imagine that these are not contiguous properties and are subject to many leases. Anyone with a Pugh clause will throw that number off. Also, larger property holders would be prudent to release acreage as they drill. Too many people have learned from the early times that it stinks to have 1 well hold much acreage.

  8. 8
    Sambone Says:

    #5 – Z, I agree, BUT the street doesn’t see it that way. They are fair weather investors.

  9. 9
    zman Says:

    Sam – the Street, as in the sellside will see it that way. The buyside will too. They are sophisticated enough to not be alarmed. If you mean the casual investor then maybe so. Their selling pressure won’t last from this but the deal may weigh on shares for a few days. They will likely price it tonight.

  10. 10
    Sambone Says:

    Canes – Nothing at this time to report

  11. 11
    zman Says:

    The 1 well to hold 640 acres came from the lips of Aubrey. I see your point and I’m not saying it’ll stand up (although CHK says it will) but their five year drilling plan easily swamps the 860 well count number so you’d have more than one spud per section by then.

  12. 12
    ddaley Says:

    CNBC does seem to be moving into a new low, with Kudlow on, and Suzy Orman replacing Fast Money in the 8 PM slot.
    But Fast Money maybe the best 30 minutes. Last night: Terranova reminded listeners that June is cyclically strong for NG and July weaker.
    Tying in to Nicky’s technical comments yesterday, there was also an ex GS commodities analyst on, offering: CL may be weak in the short term, “a few days”, perhaps to 124, but that would be a “buying op”, as it could go to 160 -170 by the end of the year, sooner, “if the Bush administration does something more stupid in the Middle East.”
    He made a remark about currencies, that currency traders do not want to buy the dollar, or the Euro this year, and they are most apt to “park” their capital in commodities and oil. I guess that is our side of the trade.

  13. 13
    Wyoming Says:

    Either way the drill #’s point to NOV, NBR, PTEN, H&P (HP not HPQ). I really like them more as they have pricing power and long term contracts with minimal mom and pop. Wireline, fracturing, snubbing, all have way more pressure on pricing and are easily removed from contracts.

    It is a lot of hole to be made.

  14. 14
    zman Says:

    Wyo – agreed. What about WFT for same reasoning?

  15. 15
    VTZ Says:

    Z – Hahaha, I laugh at the fact that CHK is pre-releasing that hedging loss! And everyone is reporting it as a headline. I’d say they obviously don’t want it as the headline when they release earnings.

  16. 16
    zman Says:

    V – very much agree. They are used to the practice by the headline grabbers of DJ of pulling out the one piece of negative or seemingly negative news from a story. It’s just unreal those headline guys have jobs. CHK will be taking up 2008 and probably beyond production guidance that day so you are probably correct that they want people to say hedge losses? We already know about hedge losses.

  17. 17
    kiaora Says:

    ddaly….do not understand your comment about GS analyst….CL?

  18. 18
    zman Says:

    CL = crude light, the price of oil.

    NG by the way is off another 7 cents

    I’d like to see EIA numbers to see if my Bounce headline for the post remains applicable.

    CHK down but not getting drilled.

    Congrats to Scoop on a nice fish in SLB with the JP focus list move this am.

  19. 19
    Wyoming Says:

    I took some WFT Aug 50 (WFTHJ). Thinking about some more maybe further out (obviously closer to the money), way oversold but I won’t fight the market. Got caught looking with all the others in my hand.

    They fall into the latter pressures I mentioned. They have decent service and pricing and they understand the NAM market, drunk monkeys can and do sell international. I think they are in the same position as HAL of last year.

  20. 20
    zman Says:

    Wyo – agreed. Wish you could post the pix you sent me of one of their 8 well completion platforms. That is definitely how you do that.

  21. 21
    zman Says:

    HK on fire, what a difference a day makes.

  22. 22
    scoop006 Says:

    Z, #18 thank you don’t forget NOV

  23. 23
    VTZ Says:

    CHK trying to fight to green to join the group it looks like.

  24. 24
    zman Says:

    Scoop – if I give you too much credit people will think I’ve gone soft and then its just work, work, work all the time, lol. Nice trade there too!

    CHK off less than a buck. I’d bet they price at $60 even tonight.

  25. 25
    zman Says:

    GDP at 65.28 up on the day after pricing their deal at $64 last night, speaks well for investor appetite for secondaries in the group right now.

  26. 26
    tater Says:

    Z – I know that you certainly don’t need any cheerleading out of me, but I am really impressed by your HK trading. Nice going!

  27. 27
    zman Says:

    NFX jumping triple the average in the group, now news.

  28. 28
    Garyinhou Says:

    Morning, Nice Sgt Barnes quote Z..

  29. 29
    zman Says:

    Gary – thanks and its not even Friday although this morning when I wrote that I may have been wishing for a quick close to the week. The “work, work, work” quote comes from another masked man in the Princess Bride.

    Nice rebound in OII, unfortunately I have not yet entered the long dated so this will just provide an opportunity to salvage a little coin from my $80 July calls.

  30. 30
    Fred Says:

    Thanks to tater too for his HK chart work.

  31. 31
    ddaley Says:

    Z What is your current thinking about the UNTHR @ .85, off a contract high of 4.5? Move with the OIH and the upcoming season? Earnings are 8.5 at 11 AM.

  32. 32
    zman Says:

    DD – I’m likely to hold it and add a lower strike in August or higher longer to participate in a rebound pre and post earnings.

  33. 33
    VTZ Says:

    Yeah tater, your chart read HK like a book. Good job and much appreciated.

  34. 34
    zman Says:

    I’ll throw my me too in the on the appreciation for Tater. Best performer on my screen today in E&P. Thoughts on OII chart when you get a chance?

  35. 35
    zman Says:

    UBS raises PXP price target to 97, analysts still warming to the magnitude of this play.

  36. 36
    Dman Says:

    PQ up almost 7%. Forgiven already for … er … whatever it was they did wrong yesterday?

  37. 37
    zman Says:

    Oil wilting prior to numbers in 15 minutes, easing the group off its highs as well and destressing the broad market a bit.

  38. 38
    uop Says:

    zman:
    crude draw:
    if up?
    if down ?
    what is this going to do to oilprice ?

  39. 39
    Nicky Says:

    Morning all. Crude looks to have completed either 2 or 4 up this morning to the 138 region. If it is 2 we are going to see much steeper downside in wave 3. If it is 4 then we will see downside but not as powerful before a decent bounce.

  40. 40
    scoop006 Says:

    Crameroo taking profits on EP up 8%

  41. 41
    Popeye Says:

    Big draw.

  42. 42
    zman Says:

    Uop – see comment in post. I think bigger than a 2.1 mm barrel draw, as cons in supportive.

    crude fell 5.9 mm barrels
    gasoline up 0.9
    distillate up 1.8

    imports eased to 9.5 as I was saying in the post, sometimes I get lucky.

    capacity at 89.2% in line.

  43. 43
    Nicky Says:

    No guesses for where the traders being interviewed on CNBC are positioned. You could almost hear the sigh of relief in Ira Epstein’s voice when he said this draw saves the oil market!

  44. 44
    Nicky Says:

    Chart setting up bullishly for crude short term I feel.

  45. 45
    zman Says:

    gasoline demand held steady at nearly 9.34 mm bpd last week, would have thought it would have bumped a little for the holiday but these prices are reigning it in.

    Nicky – it was an imports slack based number so I would not expect an immediate run on 140 (not at least until we head towards the close then who knows). Gasoline production was off a hair so its not a high quality draw down. There was more diesel production which is not surprising given the continued strength in pricing in the U.S. and for the export market.

  46. 46
    italyinvestor Says:

    Z – conspiracy theory of the day. CHK does the secondary to buy out QBIK at 8 a share. Full disclosure – I missed the move up and don’t own a share, but learned a lesson wringing my hands over a penny or two on a limit order….

  47. 47
    tater Says:

    That’s very nice of you guys. Updated version of 60 min chart for HK. This time frame is not necessarily appropriate or of much use to most traders.

    http://stockcharts.com/def/servlet/Favorites.CServlet?obj=ID2933882

    I will get started on OII. Out late last night so everything is a bit hazy. (I guess that’s disclaimer enough for what I’m posting!)

  48. 48
    zman Says:

    watching oil make a run on red, like I said not a high quality number from first impressions. See no reason to get uber aggressive into this reflex rally in the group.

  49. 49
    Nicky Says:

    Z – its possible we make a lower low than yesterday I think and then see a bigger correction. Either that or we are still in the sideways correction off yesterdays lows which could still go higher.

  50. 50
    tater Says:

    OII
    Just a quick glance before I go further, look out! Daily chart shows a rebound up into the down trend line. I’ll get you some more, but that sure looks like a down channel.

  51. 51
    Nicky Says:

    That said I think it is looking quite obvious from the reaction to the inventory data that sentiment has started to shift and that we are setting up for a bigger sell off.

  52. 52
    zman Says:

    Italy – I’ll give you a free sub for a quarter if CHK takes out QBIK. Offer limited to 2008 and they have to buy the company and not just a lease or two off them, lol.

  53. 53
    Nicky Says:

    Natural gas tanking again. I actually think it is leading crude right now. Could go sub 12 on this move before a bounce back towards the 12.6 region.

  54. 54
    zman Says:

    Nicky – I think we’re at one of those points where we will be $10 lower or $10 higher in short order, two weeks. The Iran missile stuff is pretty fluffy as far as impacting demand goes, probably nothing comes of that soon but I guess you never know.

    Thanks Tater re OII, was just thinking support had become resistance there. Will likely kill the July’s today, especially if oil acts poorly.

    CHK hugging $60. $60 gets you $1.5 billion pre shoe which is I am sure what they want to raise with this deal.

  55. 55
    uop Says:

    zman:
    crude draw down was bigger than expected,
    oil price is dropping now as not even the infamous traders are acting (yet ??),

    demand destruction (I hate the word), people are driving less, so at these prices, why do we need more imports ?

  56. 56
    zman Says:

    Uop – Imports are a relative thing. They are relatively low right now for this time of the year. Gasoline production this time of year is still higher than in the off season and although inputs are lower to refiners, they aren’t off as much the press seems to believe. Without a certain level of imports stocks fall as they have been for quite some time. We are below the 5 year average on inventories and well below year ago levels. When you take into account that OPEC is producing more now than a year ago it points to the crude going to meet demand elsewhere… China, India and the Gulf States themselves.

  57. 57
    zman Says:

    Group very much eying crude, direction of the better performers like HK is tick for tick with crude.

    Nicky, re NG. Agreed looks a little weaker. Lot of heat this week so look for a smallish build next week and a bounce for NG when the final temps come out Monday morning. There seems to be a lot of disappointment with the first Hurricane of the season bending into the middle Atlantic. Sambone can say better than I but sometimes cyclones will follow the same track for part of the season so traders may be thinking that C, D, and E will follow the same non threatening track.

  58. 58
    Nicky Says:

    Z – I wouldnt be surprised to see both ie 10 dollars lower from here and then a $10 bounce from there.

    I think it is very significant that they could not march this market higher on that data. What’s more that is absolutely what everyone expected to happen if the data was bullish. Once that trade stops working it doesn’t matter what bullish news they throw at the market – if sentiment changes that’s it and its’ done. We will get week after week of people saying I don’t understand why its not rallying when the news is so bullish just like nobody could believe how it rallied week after week when crude inventories were building. We will be thrown a few curve balls in the meantime to test us of course! Today is one of those days. But frankly the chart is bearish and the downside is not finished even if it turns out to only be a short term correction off the highs.

  59. 59
    zman Says:

    Big cap E&P has largely gone red. EOG tempting here but the group could still suffer a final shakeout before it gets its legs.

  60. 60
    uop Says:

    zman;

    NG has been an absolute disaster for me, I lost shorting UNG as NG went up, then I loose when the darn UNG goes down.
    hurricane threat has not helped,
    temperatures up north have not helped,
    in summary: this is too tough to manage as there are too many factors,

    only one thing is clear: NG price has marched in line with oil price.

  61. 61
    BossmanG Says:

    Z,

    what are the chances of reversal in CHK, OII, NFX scuds by next week? looks depressing

  62. 62
    srp Says:

    An important point often missed by the weeekly DOE stats is the level of European gasoline stocks. Roughly 90% of all gasoline imports to the US are from Europe, so if they are long gasoline, which they are, lower US inventories are relative. It seems that demand in simply lower than we or the data implies.

  63. 63
    zman Says:

    Uop – the NG trade is very tough as half the traders out there have bent their pick shorting it since $7. I got creamed in UNG puts as well a few months back and have found it much more profitable to track the names that sell it instead of the commodity itself. I would expect a bounce in gas as per Nicky’s levels and with heat that will show up in next week’s small injection.

    Bossman – I would expect a bounce between now and then for each of them but not to the degree that I get back to even or even close.

  64. 64
    tater Says:

    OII charts

    http://stockcharts.com/def/servlet/Favorites.CServlet?obj=ID2933882

    Look at Weekly chart first, then 1 yr Daily, then 6 month Daily.

    I have to believe that there are less muddy waters out there, this one has quite a number of land mines (to mix a few metaphors)

  65. 65
    zman Says:

    SRP – I show gasoline stocks as bloated as per EIA data. Are you saying they are even more bloated or are you saying demand is somehow lower than that reflected in the weekly numbers? Just trying to follow your logic.

  66. 66
    zman Says:

    Refining group once again less than thrilled with the numbers.

    Thanks Tater. Agree with your $50 comment on HK, nice to see it potentially have the chance to sell from there soon.

    Slow news day, crude failing to give up the ghost just yet, I would expect pretty wild trading into the close with a move following on the direction tomorrow. So up late probably means up in the morning and VV.

    Re E&P names I’d be satisfied with a close near these levels for the rest of the week, letting the stocks rest and the stories start to matter again. The group still has a very nervous tone to it.

  67. 67
    Sambone Says:

    By Stephen Cox, CMT
    A Dow Jones Newswires Column

    NEW YORK (Dow Jones)–When the money markets are dull, as they generally are
    so far Wednesday I think theoretically. And circumstances make me think of
    crude oil futures, which, although quiet, aren’t uninteresting.
    On Monday, when Nymex August crude oil was trading near $140, I projected a
    dip to the $136.31-$136.07 support band. On Tuesday the contract fell to
    $135.14 but then finished its combined pit and electronic session at $136.04,
    and that $136.04 was a tolerable hit on the $136.07 projection
    Wednesday trading opened at $136.00, which, if I’m not torturing a point, is
    likewise proximate to the formal level of $136.07. The contract is trading as
    of this writing near $136.40. See chart at
    http://www.dowjoneswebservices.com/chart/view/1164
    My question, put out with no intention of self-aggrandizement, is this: was my
    projection of $136.07 right on or not? It may be the proverbial question of
    whose ox is gored.
    I’d say frankly that the call was a good analytical assessment. On the other
    hand I can imagine the discomfiture of a short-term trader who sold
    aggressively into Tuesday’s intraday dip below $136.07 only to be blown out by
    the ensuing higher move from $135.14. Perhaps the point is that all of us in
    this business want to be absolutely right, but that the good that each of us
    may do is relative.
    More practically, the above-referenced chart shows that the Tuesday bar and
    the Wednesday bar really are interchangeable at least in this sense: Crude’s
    next trend on the daily chart will be signaled by its breakout from Tuesday’s
    range between $135.14 and $142.44.
    I’ve gone on record as saying that the breakout will be to the downside and
    that the nearby will be targeting $127.61-$127.35 support. If and when the
    market gets there then I’ll no doubt have to face questions similar to those
    above. That’s what’s in store if you want to be a technician when you grow up –
    as if growing up isn’t difficult enough.

    -By Stephen Cox, Dow Jones Newswires;
    (Stephen Cox, a chartered market technician, is chief technician for Dow Jones
    Newswires.)

  68. 68
    Sambone Says:

    11:13 am EST

    By Brian Baskin
    Of DOW JONES NEWSWIRES

    NEW YORK (Dow Jones)–Crude oil futures traded slightly higher as a
    surprisingly large draw on U.S. oil inventories was countered by more signs of
    falling gasoline demand.
    Light, sweet crude for August delivery traded 22 cents higher, or 0.2%, at
    $136.26 a barrel on the New York Mercantile Exchange. Brent crude on the ICE
    futures exchange traded 57 cents higher at $137 a barrel.
    Oil inventories fell by5.8 million barrels in the week ending July 4,
    according to the U.S. Energy Information Administration. This far exceeded the
    analyst consensus forecast of a 1.4 million barrel drop. Most of the decline
    was on the West Coast, a market that is isolated from the rest of the country.
    “The crude draw is being discounted because the draw was mostly in (the West
    Coast),” said Tom Bentz, a broker and analyst with BNP Paribas. “It seems the
    market is still in bear mode.”
    Gasoline inventories rose by 900,000 barrels, more than the 200,000 barrels
    expected by analysts. Demand fell by 10,000 barrels a day from a week earlier,
    despite the start of the July 4 holiday weekend. Over the four weeks ending
    July 4, gasoline demand is off 2%, the EIA reported.
    The EIA has been reporting a small year-on-year decline in gasoline demand for
    weeks, however, and evidence of further drops are unlikely to have a major
    impact in the market, said Tony Rosado, a broker at GA Global Markets.
    With the EIA numbers neutralized, the market quickly shed gains, and briefly
    turned negative. After two days of heavy declines, trading remained tentative,
    with few willing to take significant bets that the market would surge to new
    highs or extend losses.
    “I don’t think (the data) is going to convince anybody to come in and buy this
    thing right now,” Rosado said.
    Front-month August reformulated gasoline blendstock, or RBOB, recently traded
    up 1 cent, or 0.3%, at $3.3731 a gallon. August heating oil traded 2.83 cents,
    or 0.7%, higher at $3.8485 a gallon.

    -By Brian Baskin, Dow Jones Newswires
    Dow Jones Newswires

  69. 69
    ram Says:

    I do not want to be a chartered market technician when I grow up.

  70. 70
    srp Says:

    I guess my point is that even if you were to see draws in US inventory, there is an abundance of supply that can get here in 7-10 days. And i believe this is getting priced into the market as the forward gasoline crack in Nov/Dec is less than a buck.

  71. 71
    zman Says:

    CHK getting a little more pressure as its debt goes on “watch” at S&P. The watch is for a potential upgrade (positive implications) as they will be taking their burden down some with the deal proceeds.

    Ram – me either, much happier to leave the dark arts to Tater and Nicky.

    Thanks SRP, point taken. It’s being priced into the indie refiners too.

  72. 72
    Sambone Says:

    Mr. “Right”

    http://www.321energy.com/reports/flynn/current.html?print=on

  73. 73
    zman Says:

    Just going over the July scud list right now.

    CHK – Thinking I will wait out Monday for CHK. I want to get the deal closed and any post deal support pieces into the hand of market participants. They can put these out the day after the deal, unlike the 30 day wait after an IPO. Items to be stressed will include upcoming higher production guidance on the 2Q call, a probably beat of reserve projections also on the 2Q call and the fact that CHK is not a one trick pony and will likely spend time on the call talking about its other plays as well as the 7 plays they announced back on March 24 when they broke their position in the H.S.

    more on other scuds in a second.

  74. 74
    zman Says:

    RE NFX July’s – I had my chance to get out last week and botched it. Next to worthless now will sell into any strength and barring strength in the sector will sell them Monday if they have no news out. I hold September calls here as well which I am quite comfortable with.

    OII – already mentioned but to round out the list I will sell into further strength this week for a near total loss and will reposition probably after next week. Not really thinking of it as an earnings play and may not get back in for 2Q.

    HK July $50s, just milking this reflex rally, think we could get further positive move tomorrow and Friday if today stays green. Have plenty of longer term exposure and will definitely be as long or longer for the 2Q call.

  75. 75
    zman Says:

    Lightning round quote for CHK last night.

    “If this stock holds, and the futures of natural gas hold, you’re going to get the next leg up… If it doesn’t hold, then we’re going to suffer.”

    I’m going to add some August $60s in the next little bit here (today or tomorrow).

  76. 76
    ddaley Says:

    News/views from a briefing trader.

    TrendTracker- Oil and Gas Commentary

    Suddenly it seems few people want to own oil and gas stocks. The prevailing opinion is that the price of crude that governs these stocks could be done. I have my doubts. Oil is in a classic bull market pattern that often ends with a climax top which features the most remarkable percentage gains in its final stage. (See QCOM leading up to its top in Jan ’00). We haven’t seen that yet. I believe we will. What stocks are likely to benefit from this final explosion should it occur? I believe it’s best to look at the group that’s already realized the biggest gains: USA E&P’s. While energy companies of all other stripes have lagged (integrateds, international producers, refiners, service and equipment providers), this group has scored gains this year roughly equivalent to the underlying commodity. It is the most favored because the market doesn’t just want increased supply, it wants increased domestic supply; supply that is protected by the rule of law and threats of interruption. That’s why this morning on my watch list I said I wanted to open small positions in 3 USA E&P’s, CLR, SD and EAC. These companies have had tremendous gains because they are bringing to market local production in promising new areas. Technically they have pulled back to their 50 MA’s where they are trying to turn. If their run is to continue it will begin here. I could be wrong. But this is the lowest risk entry you are likely to find if you believe it’s not over.

  77. 77
    Bleemus Says:

    Am I correct to assume the “Mr Right” moniker given to Phil Flynn was dripping with sarcasm?

  78. 78
    texana Says:

    buying some more eog oct calls here at what i hope is near term support. the stock action is tracking $xbd which is probably the computerized trade model. any downturn in the mkt will be followed by eog , unless we have a news event.

  79. 79
    zman Says:

    Oil coming off yet again, convictionless market like this could lead to some sharp volatility.

    Texana – I’m almost with you on EOG but the market is keeping me sidelined at present. Despite a mostly green screen the XOI, SNG, OIH are all slightly lower today.

  80. 80
    1520sbroad Says:

    anyone have a date for hk Q2 earnings? my guess is 8/7/08?

  81. 81
    Bleemus Says:

    HK Earnings – Next earnings release: Aug 7 after market, unconfirmed. First Call Research estimate: 0.25

  82. 82
    texana Says:

    hear ya z, i ‘ve been buying red & selling green lately.

  83. 83
    zman Says:

    hear ya tex, normally my plan as well, red has been extending and the longer dated option are not affording as much protection as they did before, noticing some premium compression so while they give psychological comfort they are financially pretty vulnerable when the group drops 15% in 4 days. I wonder when Cramer says its safe to go back in the water, lol.

  84. 84
    Sambone Says:

    #77 – Yep

  85. 85
    zman Says:

    ZTRADE: Entered SLB AUG $100 Calls (SDBHT) for $5.20.

  86. 86
    zman Says:

    NG down 35 cents and breaking $12. Think it is now oversold but the trend is definitely violated and selling without no new news on the screen.

  87. 87
    1520sbroad Says:

    #81 – thanks
    should make august calls interesting

  88. 88
    texana Says:

    tater gave u vote on sc.com, thx for the charts

  89. 89
    Nicky Says:

    Nothing to like about the broader market action right now even with oil down. Certainly doesn’t look as though we have made a low of any significance yet and confirms that any bounce into 15th July is likely to be countertrend.

  90. 90
    zman Says:

    Mivky – market needs a leader. Market needs a strong energy sector.

  91. 91
    Bob Says:

    CHK buyers trying to defend 50 DMA for second time today

  92. 92
    Nicky Says:

    Maybe Z – but I would say that is a double edged sword. As everything else has tanked as energy has moved higher, including the broader market. To see any sort of sustained rally then we actually need to see some sort of move back into the financials, retail, housebuilders and all the things which would point to a recovery in the economy.

  93. 93
    scoop006 Says:

    Z- Any idea when & for what price the CHK offering is scheduled. Seems to me if it’s $60. the July 57.50 may be worth a shot

  94. 94
    zman Says:

    Nicky – agree completely but it seems those sectors are not ready yet. When I say energy sectors I mean the equities, not the commodities. They don’t necessarily move in the same direction.

    Scoop – last deal closed the day after it was announced, at around that day’s closing price I think. Will look up and get back to you but it should be tonight or this week at latest.

  95. 95
    zman Says:

    Scoop – looks like they priced the last deal slightly in the hole to their closing price the day they announced it. So by that logic if it closes at $59 tonight it might price for $58.50. Market and the group getting banged right now as crude closes essentially flat and NG falls 3%. Not sure what catalyzes the group prior to earnings outside of an oil moving event. Back to selling the rallies action now. I’d rather buy higher than try to fish this market, action just looks all wrong to me.

  96. 96
    scoop006 Says:

    Thanks for #95 You make sense

  97. 97
    zman Says:

    Scoop – back to pure technical trading again which is not my bag. Forces me to be more tradey than I like to be. Ug.

  98. 98
    doc Says:

    mmr has 26% short interest I may buy some puts. mmr chart looks really sick

  99. 99
    scoop006 Says:

    Z- I know you do not day trade but with your knowledge and skills I think “X” deserves a ZMAN revisit

  100. 100
    Sambone Says:

    Off subject – You want to watch how Cramer can move a stock, check out FRE. He just said they were insolvent.

  101. 101
    scoop006 Says:

    Crameroo sold another 1000 shares of EP; watching DVN COG & SWN for additional buys

  102. 102
    texana Says:

    this is all computer driven trading, so the question is can u out trade the computer. r as z said stand aside

  103. 103
    jsaun14 Says:

    Doc –

    Chart looks bad, but they is a big event on the horizon that could go either way. Note the story on MMR on Bloomberg this am.

    http://www.bloomberg.com/apps/news?pid=conewsstory&refer=conews&tkr=MMR:US&sid=alLS9yvfqCeI

  104. 104
    zman Says:

    Scoop – like the X but not the way it is trading for now. Horns pulled in a little for a few more days.

    Refiners getting just wrecked.

  105. 105
    kyleandy Says:

    just sold HK 40 july puts @1.05

  106. 106
    Hoss Says:

    Just checking up on the House and Senate and discovered this event:

    House Committee on Agriculture
    Reviewing legislation amending the Commodity Exchange Act today through Friday.
    http://agriculture.house.gov/hearings/schedule.html
    *Live audio and video here and happening at this moment.
    http://agriculture.house.gov/hearings/audio.html

  107. 107
    zman Says:

    Ky – nice trade there?

    EOG sort of more tempting now.

    SLB trying to rally.

    See weak little pockets of strength here and there, nothing to hang your hat on.

  108. 108
    VTZ Says:

    Re 92 and 94 – I agree with both Nicky and Zman but the question I have is who in their right mind thinks that this is as bad as the economy/writedowns is going to get and is moving their money to financials?

    Bad economy leads to FED holding rates leads to inflation leads to higher oil?

    Another thing to keep in mind is that because the USD is being inflated against almost every currency in the world. It isn’t AS expensive to buy oil for them because it’s priced in USD. Also, a global slowdown doesn’t mean reduced demand globally, it’s still growing.

    I’m probably just foolish but why should money be flowing into financials when they still have all sorts of writedowns coming and there is talk the economy is slowing. Who is putting their money there intelligently other than maybe deep value people?

  109. 109
    tomdavis12 Says:

    Z do you believe in the scarcity value of the refiners since nothing new has been built since ’76? Or is that the kind of logic that gets one in trouble?

  110. 110
    zman Says:

    V – the guys on Fast Money last night, that’s who, lol. They were in love with names like FNM.

    The people who are buying financials now or saying to buy them are the same jokers who said short energy and buy the financials back in October. What a trade that has been.

  111. 111
    zman Says:

    Tom – I do if you are talking about buying and hold the stocks. I think consolidation is coming although I’m not at all certain when or what form it will take. From an options perspective however I find that a very tough thing to play. You could buy leaps the premiums are steep and in the long run oil may take even the stalwarts to single digits. You also have to think about Saudi’s recent promise to drastically increase refined product capacity. I’m not a refinery analyst and I don’t play one on the internet but I what I see rescuing these guys in the short term would be lower oil and a consumer that has a little breathing room not created by the plastic in his wallet but by an easing of inflationary pressures. Right now I don’t see that occurring. Expectations in the out years are high and falling giving analysts very little to cheer the group about. It’s said really as the public thinks the ubiquitous “oil company” is making a killing right now every time they fill up at a Valero and the elected officials are doing nothing to alleviate the issue like, oh, I don’t know, encouraging capacity expansions at existing refineries and putting the screws to car makers on CAFE standards. Apologies for the soap box but people like to drive and they don’t put oil in their tanks. Like I said, somethings gotta give with this group but I don’t know when it will happen.

  112. 112
    Sambone Says:

    V – The market is telling you something when you can get over 11% yield on BAC. More trouble ahead is what my tea leaves say. Thta’s why i didn’t sell my SKF yesterday when it fell 20 bones.

  113. 113
    tater Says:

    Any catalyst for CHK in the next 48 hours?

  114. 114
    Nicky Says:

    V – I am not for a minute suggesting anyone buy the financials – purely saying that is what it is going to take to turn this market around.
    All that said unless you believe these stocks go to zero they have been absolutely slaughtered and I believe people will be bottom fishing very soon.
    The charts point to an extremely strong rally starting sometime in August. It will be nothing more than a bear market rally imo but they can be vicious.

  115. 115
    Sambone Says:

    Overall market looks to going into freefall at the moment.

  116. 116
    zman Says:

    48 hours, just the closing of the deal, maybe some friendly comments from the selling syndicate analysts but probably bulk of those on Monday.

  117. 117
    VTZ Says:

    I just think that people have put a lot of faith into demand destruction and failing economies and when they do it they talk largely about the US economy but then they turn around and say that’s the place to invest… WHAT?!@!@

    Sorry, I’ll stick to the folks who are making the most universally used and demanded commodity in the global market, thanks.

  118. 118
    tater Says:

    Thanks. Itchy trigger finger. I think I will just go walk the dog. Have a good day everybody.

  119. 119
    zman Says:

    V – exactly..

    Tater – I’m plenty at present, just not adding yet. Nothing to do with them. Lousy market.

  120. 120
    Bob Says:

    Looks like CHK will close below 50 DMA for first time since January. Blame the poorly timed secondary

  121. 121
    Sambone Says:

    Tini time

  122. 122
    italyinvestor Says:

    Z – Been rolling this one over all day – how about a lifetime subscription if QBIK takes over HK! Looking for some laughs as its been a bad few days in the market.

  123. 123
    VTZ Says:

    One more thing to add about nat gas longterm regarding the imports from Canada. Those WILL be going away in amounts proportional to the development of the oil sands until more people start building gasifiers (which are multi billion dollar projects, as well).

    Nat gas is the biggest cost in the oil sands and the amount of energy input required is incredible.

  124. 124
    Nicky Says:

    If any sort of short term bullish count is going to play out in oil then 131.95 has to hold. I can tell you that the equivalent level in unleaded was broken yesterday which may or may not prove to be telling.

  125. 125
    Fred Says:

    Ugly two beer day!

    TSO slammed for 12% on rumor of an earning drop.

    Iran needs to zip it up or could be bombed into the stone age.

    VTZ – #122 lots of water required ta boot.

  126. 126
    SkyKing Says:

    Zman-
    A day or two ago, someone in Congress requested that Bush release some of the Strategic Petroleum Reserve (SPR).
    Since the election is approaching, do you think they may do it in order to get votes? I guess it would lower the price of gas considerably and greatly affect our energy stocks.
    Is there enough SPR to do that?

  127. 127
    Nicky Says:

    SkyKing – I saw that the Speaker of the House, Nancy Pelosi, asked him to do that yesterday. He has resisted so far…

  128. 128
    Nicky Says:

    V – I actually happen to believe in demand destruction and on a global level. High prices cure high prices. If oil carries on up everything is going to hell in a handbag anyway.

  129. 129
    irished Says:

    hell in a hand basket, please.

  130. 130
    VTZ Says:

    Nicky – To me, high oil prices cure the need for everyone to own an ipod and new cell phones.

  131. 131
    Hoss Says:

    Just checking up on the House and Senate and discovered this event/non-event:

    House Committee on Agriculture
    Reviewing legislation amending the Commodity Exchange Act today through Friday.

    http://agriculture.house.gov/hearings/schedule.html

    *Live audio and video here and happening at this moment.

    http://agriculture.house.gov/hearings/audio.html

  132. 132
    Hoss Says:

    Just checking up on the House and Senate and discovered this event/non-event:

    Basically discussing CFTC’s oversight or lack thereof of the oil(WTI)trade.

    House Committee on Agriculture
    Reviewing legislation amending the Commodity Exchange Act today through Friday.

    http://agriculture.house.gov/hearings/schedule.html

    *Live audio and video here and happening at this moment.

    http://agriculture.house.gov/hearings/audio.html

  133. 133
    isleworth Says:

    CHK priced at $57.25

  134. 134
    isleworth Says:

    CLR announced initial results from its Mathistad 1-35H well completed in the Three Forks/Sanish formation in the North Dakota Bakken Shale area. The McKenzie County well, in which Continental has a 40% working interest, is the second that the co has completed in the Three Forks/Sanish formation in North Dakota. “The Mathistad 1-35H commenced production on July 4, 2008 and has flowed at an average rate of 1,095 barrels of crude oil equivalent per day, with 90 percent of production being crude oil and 10 percent natural gas… This is a second positive data point in our effort to determine whether the Three Forks/Sanish formation is a separate oil-producing reservoir not drained by a horizontal well completion in the Middle Bakken zone above it. If the Three Forks/Sanish proves to be a separate reservoir, it would add significant incremental reserves to the Bakken play.”

  135. 135
    Bleemus Says:

    CHK Chesapeake Energy announced that it has priced its public offering of 25 mln shares of its common stock at $57.25 per share (57.72 -3.83) -Update-

    The co has also granted the underwriters a 30-day option to purchase a maximum of 3.75 mln additional shares of its common stock. CHK expects the issuance and delivery of the shares to occur on July 15, 2008, subject to customary closing conditions. CHK intends to use the net proceeds from the offering to temporarily repay outstanding indebtedness under its revolving bank credit facility which it anticipates reborrowing from time to time to fund its recently announced drilling and land acquisition initiatives and for general corporate purposes.

  136. 136
    Bleemus Says:

    MRO Marathon Oil Provides Q2 2008 Interim Update; co expects to recognize an after-tax loss of approximately $250 million on crude oil derivative instruments

  137. 137
    Nicky Says:

    Dennis Gartman on CNBC. He says he started buying the banks today as he thinks they are ridiculously cheap. He has hedged it by being short the broader market.
    He also said the commodity trade was done for now – maybe a year (I am not sure I agree with that time length). I sensed he was referring to energy mainly. Made some interesting comments about a lot of people being in at far too high levels, including pension funds and they are now going to have to offload on any rallies they can which will drive the prices down. Made sense to me.

  138. 138
    zman Says:

    RE CLR – that is a better well than the first TFS which did a little under 700 Boepd on a 7 day test. Should be up action for them and the other Bakken names in the morning market willing. CLR is bid up $2 in AH.

    CHK – not the best price but they will be ok with it as they still end up raising $1.645 billion with the over allotment which seems to be their target size for deals these days.

    Nicky – they have hauled this same kind of doom and gloom guy out every time oil has a few bad days. Love to know what makes this different. Banks are in a world of hurt and who knows the true picture of their balance sheets. I’ll stick with cheap energy names at much lower oil prices.

  139. 139
    Nicky Says:

    Disagree Z – this guy is one of the best commodity traders in the world and many funds follow him. The risk/reward now must be for an upside move in financials whether the fundamentals bear it out or not. Agree it will be a bear market rally but think it could be huge. They are just too beaten up short term. I don’t disagree about cheap energy names at much lower oil prices (btw how much lower are you referring to?) and I am sure he wouldn’t either. But again the oil trade has been done to death and the trend looks somewhat mature. It is well due a pullback. Whether it comes from another move higher to say 175 I don’t know or we are already done is still too soon to say.

    I guess all I am saying is not that fundamentals support it but right now all the current trends look overdone and ripe for some sort of reversal.

  140. 140
    zman Says:

    Nicky – we’re not talking about the same things. I’m talking energy equities which do not move in lock step with oil prices. Oil can drop to $100 (I don’t think it will but you never know) and the energy equities, especially the E&P names will be cheap on an historical basis. And supply will contract further. If you’re talking technicals on the banks, I have no idea. But if you want to put the fundamentals of the two industries against each other the banks don’t have a chance.

    I still say that smart guy after smart commodity guy (Phil Flynn may have been the first) called for a top on the first down turn in oil and without a fundamental reason other than they thought prices were too high. That’s not a reason as you don’t know if maybe prices were just too low for all those years. I know $12 in 1998 was certainly too low but maybe $50 in the last 2 years was too.

    People bandy about demand destruction with the thought that the total global demand for barrels is actually going down. So far not many groups are looking for that; instead just a contraction of the growth rate. Meanwhile, supply from many of the major producers, including the U.S. is shrinking. In fact, U.S. production just fell below 5 mm bopd as of today’s report, kind of odd when you consider where prices are and how much drilling has accelerated. Unless you think about the fact that even with all the new discoveries coming on stream in plays like the Bakken, the U.S. still can’t even maintain production vs the declines we are seeing in older legacy fields. The problem is worse in Mexico where the U.S. gets a large chunk of our oil. And the growth in Canadian volumes only comes from oil sands which work fine at $120 but are death at $60.

    Anyway, just wonder what is different now and why in heavens name I would want to buy a bank, unless its a chart thing.

  141. 141
    Nicky Says:

    Z – it is a chart thing and believe me its only on a short term basis. Purely a technical bounce. We know nothing goes up or down in a straight line and this is one of those moments when I believe you may see a reversal in the things that have been working. I am not disagreeing with you and the fundamentals absolutely stink on the banks. I will add that I also don’t think we are quite there yet on the financials. I am looking for a lower low and time frame the end of July.

  142. 142
    zman Says:

    Ohhhhhh. I see now. I don’t buy banks anyway but I like to understand what those kind of people are talking about. It still sounds like the buy the financials, short energy trade I have been hearing since October. Only the banks have been beat down a lot more since then and the energy stocks have made very strong moves.

  143. 143
    Nicky Says:

    No he has been long in and out of energy, gold and grains for months now and he has been short the broader market.
    Today was the first time I heard him say he was dipping his toe in the financials.

  144. 144
    zman Says:

    should have said the same trade I have been hearing about from others, not him.

  145. 145
    Fiveanddimer Says:

    The beginning of Q2 earnings season is an interesting time to go long the financials. From everything I’m hearing, most of the banks will be announcing further assets write-offs. With the freeze-up in the credit markets, the banks’ earnings have to be pretty bleak. All I can say is that the guy (Gartman)has more courage than I do. Of course, that’s why he’s where he is, and I’m where I am.

  146. 146
    Nicky Says:

    As I said above I actually think he may be a touch early as I am looking for a low late July/early August. By that time they most likely will be beat down even further and there may be a view (short term) that the bad news is all priced in.

  147. 147
    texana Says:

    clr tfs well is 23 miles north northwest of 1st well. this is huge for clr & other bakken players. it shows that they have 40% wi & i think that mro is operator but i am able to find that infor.wll shows tfs formation under sanish/parshall fields. since this is a deeper formation i have not seen any other test to this formation in other parts of the basin , although i’m sure they would be tight holes.bakken players that may respond: clr, wll, eog, bexp, mdu, xto, nfx,kog, sm. http://bakkenstocks.com/oil/ for those with an interest in learning more, think he is an alpha man

  148. 148
    texana Says:

    the williston basin reminds me alot of the permian basin of west texas & se new mexico. its unbelievable how much o&g they r finding out here in the permian basin everyday. the same layered cake of producive formations that new tech is allowing to be produced. do u know if nfx wells r going to test the tfs in nd?

  149. 149
    irished Says:

    Do not know if you are up this late but Nightly Business Report said CHK expects a net loss next quarter due to hedging strategy. Street expected $.85 profit.
    You probably know this and have discounted it but was news to me. I thought there were some questions on why CHK down with my understanding that it was due to new stock offering.
    Just figured I would pass this along.

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