29
Oct

Wednesday – Fed + Oil Data = Volatility

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Reaction To Yesterday's Rally. Yippee-Skippee. Show me another couple of these and I'll go short. In the mean time I'd really like to see more selectivity and less full tilt green or full tilt red but, if I have to pick a color ...

Thoughts On This Market: News, even of the world-beater variety, is only of note during the first hour of trading, and if that passes muster, you may be able to count on another 5 1/2 hours in green-land before you really have to think about selling your "investment". My sense, and this comes from someone who needs replacement eyeballs and a neck brace from watching 5 monitors even in his sleep, is that we are at a near term low in the refining, coal, solar and E&P groups. As to oil service, well, that I'm going to be much more selective on. This "sense of the market" is good for at least the next 15 minutes. As to the transports, um, wow, that's just ugly and since Christmas has officially been canceled there's really no need to ship anything anywhere so the new mantra for company's like (DRYS) may have to be "when you absolutely, positively need it there by 2010" explaining the recent collapse of the BDI.

In E&P land, I have 2 words for you to forget about: production growth and two more to look for in the coming 3Q press releases: maintenance capex. If managements are not able to answer this question  within a $100 million or so during their Q&A's without hemming and hawing they do not yet have the right perspective on things. Also, forget about what is cheap because there is: a) "cheap" which many, many things are right now and which will matter soon but not yet, not really, b) "cheap for a reason" which is pretty self explanatory, and c) "cheap because someone else needed to sell it and probably needs to sell more." Balance sheet strength trumps hedges (unless you have the wrong bankers) and production growth runs counter to the greater cause of supporting natural gas prices so I recommend whacking capex now which gives you firepower to build cash and either up capex later should natural gas prices rise sustainably or buy one of your less fortunate, spendier counterparts.

 

Enough of my ranting ...

In Today's Post:

  1. Holdings Watch
  2. Commodity Watch
  3. Oil Inventory Report Preview
  4. Stuff We Care About Today
  5. Odds & Ends

Holdings Watch: The Holdings Wiki tabs is updated.

  • (SWN) - Added the $25 November calls (SWNKE) for $3.50 with the stock at $24.60 and earnings on Thursday evening. At 6.6x 2009 CFPS this is rarefied territory for the stock and unheard of in another name with their long reserve life (13 years), stability of cash flow and IRR due to their majority focus on one shale play, and strength of balance sheet (probably a little over 30% net debt to total cap as of 3Q end). Numbers have been coming down here as well as in all of the gassy plays and while the potential for further reductions in capital spending may be announced making their current Consensus CFPS figure somewhat overzealous I don't foresee much further downside to natural gas at this point which what the stock largely keys off of (96% of production is natural gas). 

Commodity Watch:

  • Crude oil closed off $0.49 at $62.73 but that was before the market shot the moon. After hours trading saw crude briefly top $65 once again proving that fundamentals are taking a third row back seat to market whimsy at this point. This morning crude is trading up $3+ 

    •  No $#!@ Sherlock Watch. The International Energy Agency (IEA) Sees Faster Than Expected Declines From the World's Oil Fields. These are the same France-based guys who have been begging OPEC to increase output to get prices down. Well mission accomplished Frenchie! Of course, if prices come down one might expect that investment will dry up...so why did you guys want prices to come down again, when you see the declline issue yourselves? The IEA's report shows that without additional levels of investment the world's fields are declining at 9.1% per year. Remember my comment about maintenance capital above? That's the amount of capital needed to replace production, basically to not grow and not fall off a cliff. That's what falling prices have yielded...maintenance capital. So now they tell us we need to invest more. In fact the paper goes as far as to say, "the issue will become even more acute as prices fall and investment decisions are delayed" and that the world needs a "significant increase in future investment just to maintain the current level of production". Unbelievable. 
    • Declines Seen In Russia. "2009 will be the first year when Russia's production is likely to fall and it has already likely reached its peak this year, in August. It looks like it will begin a gentle decline for some time" ~ Bob Dudley, CEO TNK-BP. Producing roughly 10 mm bopd, Russia is in a tie, depending on which month you look at data for with Saudi Arabia. We've known for awhile their peak (at least near term) was at hand and this is further confirmation from a guy who has better data and is closer to the source than most.

 

  • Natural gas traded up 8 cents to $6.42 on the December contract which takes over as the front month tomorrow. The slight bit of strength is probably attributable to the recent and coming cold and we should see a change over to storage withdrawals either next week or the following week, right on time. This morning gas is trading up about $0.20.
    • Weather Watch: First snowstorm of the season in New England. More importantly, the rest of the country is colder than normal too.

Oil Inventory Report Preview (estimates from the Reuters Survey)

ZComment: The Big 3 inventory numbers are only of transitory importance this week and may work in fact work in the opposite direction you'd think as in big build in crude may take oil higher on OPEC. What's more important is crude imports which have been stuck at a high 10+ mm bopd since shortly after Ike and Gustav. If these remain high it adds further fuel to OPEC's argument that the developed world is well supplied. The second number is again gasoline demand, which may turn in a better than year ago performance as prices are now below year ago places in many locations in the U.S.

Stuff We Care About Today

WLT Reports "In Line" 3Q Results; Guiding To Strong Margins For 4Q, Maybe Slight Downward Guide on Production in 2009.

  • Revenue of $388mm vs $379mm expected
  • EPS of $1.27 (excluding items) vs $1.27 expected
  • Metallurgical coal prices have been rising steadily yielding higher margins. They expect 4Q operating margins to hit another record.
  • Guidance: 2009 volume guidance for met coal production trimmed slightly from a range of 8 to 8.5 to a range of 8 to 8.4 million tons. This still represents 25% growth next year based on the mid point. 
  • Operating costs: seeing some size increases on a cost per ton basis due to labor, material and power.
  • Progress on financial segment spin out on track for early 2009.
  • In a nut shell they see higher costs but also higher met coal prices. The stock has been crushed back with all things commodity related and I have to wonder how pricing will fair as steel company's around the globe reign in production.
  • Conference Call: Today, 10 EST

 HES Reports Strong Results Which Just Miss Estimates

  • Revenues of $11.4 B vs $10.2 B expected
  • EPS of $2.37 vs $2.42 expected. With these guys, earnings is the benchmark to watch and not CFPS for which only 2 of the 14 analysts following the company even bother to provide numbers.
  • Guidance: none provided.
  • In a nutshell, this isn't one of my closely tracked names but it is one of the mini-majors and as I'm long a couple of its bigger brothers at present (XOM, CVX) its worth listening to a replay of their conference call.
  • Conference Call at 10 am. EST

SU Reports 3Q Results:

  • EPS of $1.04 (ex items) vs $1.07
  • Production came in lower than expected so they are tweaking 2008 slightly lower
  • Cash Costs of year to date of $37.45 per barrel
  • Still see volumes of 350,000 bopd sometime in 2009
  • Spending coming down by a third; slowing pace of construction at their further out expansion project
  • Conference Call: Today, 9:30 EST

Other Notable:

XOM reports before the opening bell tomorrow.

 

Odds & Ends

Analyst Watch: Credit Suisse cuts (FSLR) target to $150 from $300,

152 Responses to “Wednesday – Fed + Oil Data = Volatility”

  1. 1
    zman Says:

    FSLR on the tape with a module supply agreement that brings its tech to the U.S. market for the first time.

    Energy stocks opening green across the board.

  2. 2
    zman Says:

    November natural gas up 26 cents to $6.45 for those of you keeping score as it relates to CHK’s $6.28 knockout hedges.

  3. 3
    zman Says:

    knock, knock, this thing on?

  4. 4
    kiaora Says:

    yes

  5. 5
    zman Says:

    Thanks K, thought my mike was dead, guess just unpopular.

    Energy in broad favor to today, and likely to go quite a bit higher in the event of a dow/s&P rally.

    Getting tempted to toss my DO after a 2 day, $13 rally. Same with SWN now up $6 from buyin yesterday.

  6. 6
    BirdsofpreyRcool Says:

    z – people are pretty quiet this morning. Battle Fatigue, maybe?

    Bonds opened up a lot better (tighter) this morning, after digesting yesterday’s stock rally and seeing follow-thru in Asia. However, came off somewhat before stocks opened.

    IG 214 +1 from yesterday’s (astonishing) 213 close.

  7. 7
    tater Says:

    Great to see that GMAC with its very high quality loan program is part of the TARP. NIce. Be sure to call and thank your Congressmen and Senators for saving the world and allowing all the Escallades to be funded by your taxes. Add free health care now because the doctors don’t get paid. It’s all FREEEEE!!!

  8. 8
    zman Says:

    Tater – next it’ll be the airlines, should say airline as we look to be heading into no competition allowed, all one provider land.

  9. 9
    tater Says:

    Sorry, just had the second cup. I’ll try to keep focussed on making money.

  10. 10
    BirdsofpreyRcool Says:

    New trading strategy in credit: you have to do what everyone else ISN’T doing. Even if it doesn’t make sense. That’s how to trade bonds these days, anyway. Yesterday, everyone was expecting a selloff into close and the entire mrkt got short. Hence the move to crush the shorts.

    Today, shorts are at it again, leading the charge, waiting for the FOMC decision to fade whatever comes next. But, here’s the deal (again): when too many people expect the same outcome, we usually get the opposite. No one in credit is expecting a rally today…

  11. 11
    zman Says:

    Tater – hey man, I’m agreeing with you. So what do you make of the rally yesterday? If that’s buy the rumor then I hate to see sell the news.

  12. 12
    BirdsofpreyRcool Says:

    IG 212 1/2

  13. 13
    Garyinhou Says:

    Good morning comrades!

  14. 14
    zman Says:

    Gary = LOLOLOL. At least they have not canned term limits yet.

    Morning Bird, thanks for that. Going to be a wild one.

    Bit sad I missed the WLT trade yesterday. Will be on their call in 5 minutes to learn a bit more about the future of the met coal market, may have some implications for the wildly beaten down X. There’s a chart even a mother couldn’t love (although it looks to be improving)….so of course I’m thinking about going long.

  15. 15
    tater Says:

    To use the analogy that everybody is saying, the rubber band stretched too far. Now it will stretch the other way. Expansion, contraction. Maybe today, maybe the middle of Nov. Nicky has a good handle on that method. I’m certainly looking to find a follow through on this and then find some short entries. Still looking to hit singles.
    I re-worked the oil chart again, this time for good. I think it is worth a peek as one of the two scenarios points perfectly to the bottom (a real one) being in. First chart at the link.

  16. 16
    zman Says:

    Nice outperformance move in EOG, not just cheap, low debt to cap, low LOE, big inventory so they can switch more to higher IRR, low risk projects if prices stay low.

    Soon the stories about pricing pressure on the service guys will take hold which will be a bit of a boon for the E&Ps.

  17. 17
    zman Says:

    For those of you who don’t know, Tater’s charts are located under the Tater’s TA link at upper right.

  18. 18
    zman Says:

    Listening to WLT call, nothing earth shaking so far. See all time high met coal pricing in 2009 plus the higher volumes I pointed to in the post.

    Tater, would you take a look at CVX and DO for me. Just quick thoughts. Thinking to book some gains.

  19. 19
    zman Says:

    Go FSLR Go, you know its time to enter when the analysts cut numbers in half (on price target, not EPS) and you’re still looking at 50 to 100% moves to targets.

  20. 20
    Dman Says:

    Hi Z, I seem to recall that KWK was a high growth name, so I guess it would not be high on your list here? How about other single digit critters like PQ, XCO?

    Like the action in EOG. That and the recent move in crude suggest that fundamentals are biting for the 1st time in a while. I saw mention of an article by Helene Meisler at RealMoney yesterday, giving an indicator of an abatement in redemption selling. I couldn’t actually find the article (Denise, are you out there?) but it is obviously a valuable thing to know(!) If true then it would explain why fundies suddenly matter.

  21. 21
    Popeye Says:

    No inventory #’s today???

  22. 22
    BirdsofpreyRcool Says:

    IG 210… shorts are squirming a bit

  23. 23
    zman Says:

    Dman – that was part tongue in cheek. I like those guys but they have a $/Mcfe compression occurring as liquids prices are revalued due to lower crude prices (their gas is very wet).

    I like those smaller names but for equity trades only as this is a fragile “rally” and going to be focused on name brand names, so to speak.

  24. 24
    zman Says:

    Popeye – numbers out in about 15 minutes.

  25. 25
    zman Says:

    Bird – After naming yesterday’s post “Fed Rescue Bounce” I toyed with naming today’s “Throw another short on the fire”

  26. 26
    zman Says:

    I will very likely add WLT if it will pull back. Q&A about to start.

  27. 27
    tater Says:

    CVX is on there too. I see the spike up off the first bottom giving $74 as resistance (maybe sooner as everybody sees it too) and then above that I see the 50 EMA.

  28. 28
    zman Says:

    Thanks T. I have ignored Tater’s chart waypoints in the past to my own peril. Much appreciated.

  29. 29
    tater Says:

    But there “should” be support for CVX behind at 70 which is the top of the middle peak of the bottoming “W”.

  30. 30
    zman Says:

    Thanks for the addendum on CVX. I would not have asked but I’m in Novembers there.

    Any DO thoughts? I liked it from the 3Q call but wow.

  31. 31
    Dman Says:

    Z – year ya on the equities only for the small names. I’ve found lately that those small equities worked as a good way to play the X-treme volatility, albeit not as juicy as playing calls. CVX calls also worked well since they are liquid and the stock has been trading in a 10% daily range (!).

    I suspect a good way for the market to frustrate the most people now would be a drop in volatility, now that many have adapted to playing the wild swings.

  32. 32
    zman Says:

    10 minutes to EIA data. Probably taking some profits here. This report could be good for the refining segment if we do see a big uptick in gasoline demand. That Simmons piece from yesterday had a good slide on the impact of America keeping its gas tanks only partially full and then, seeing a price decline, filling up, resulting in a massive drawdown on mogas stocks and boosting cracks.

  33. 33
    tater Says:

    Also Cramer has found CVX to be one of his current favorites to talk about so you may become victim to his manic depressive calls. He currently uses the yield as his sell point and is advocating taking profits (I think, I don’t read him closely, just need to be aware of when I step in the way of somebody who has the ability to move the market).

  34. 34
    BirdsofpreyRcool Says:

    z – #25 LOL… one of the best country music songs ever written

    http://deemusic.homestead.com/baconbeans.html

  35. 35
    Pete Says:

    Z,

    Could you give me an update on on your view of CHK going forward. Thanks

  36. 36
    zman Says:

    Mid cap E&P’s starting to show signs of life… NFX (don’t own but really probably should) and SWN, HK but still get kicked around in my BEXP and SD calls.

  37. 37
    zman Says:

    Pete – on a call and that requires thought, will circle back to it in 30 minutes. The short of it is I own the common and some calls and am positive medium and long term on them. If things unfreeze in credit I think they are one of the ones that will pop as they are pretty leveraged and there is a large debt fear discount here.

  38. 38
    zman Says:

    E&P and Majors weakening a tad as the EIA report approaches.

  39. 39
    BirdsofpreyRcool Says:

    Tristone (pretty good at the refiners) lowered their PT on VLO from $23 to $20 based on reduced earnings expectations fr 2009. Except for Caris ($16), that is the lowest PT call for VLO i’ve seen.

  40. 40
    tater Says:

    Trying to sell some calls, so I’m kind of reading and typing and trading at same time. That’s a good idea. (Wait, isn’t that what you do all day?)
    DO and just about every oil/gas stock. Daily charts show a trendline down through the July – Oct by connecting the tops of the price peaks. As the price goes above that line on some of these, or just crests the recent middle of the bottoming “W”, the price is breaking above a trend. Prudence says it will come back to that trendline (or W peak) to test. When it turns around to do that is the game we all play. For DO my guess would be right at 86, but that’s a quick guess.

  41. 41
    bill Says:

    z # 2 i was thinking gas would rally into the close of nov

    could chk affect price by closing out nov shorts which would also help knock outs

  42. 42
    zman Says:

    …crude is not however. Will be interesting to see if “bearish numbers” mean up crude today as they influence OPEC.

  43. 43
    bill Says:

    crude up 500 k

  44. 44
    bill Says:

    gas down 1.5

    ho up 2.3

  45. 45
    bill Says:

    so bullish

    crude spiked a buck then backed off

  46. 46
    zman Says:

    crude: up 0.5 mm bbs (that’s light to expectations)
    gasoline: down 1.5 (was supposed to be up) so demand may be creeping up, will check in a second.
    distillate up 2.3mm bls. (that’s heavy)

    Imports were high again.

    Mixed bag, somewhat bullish

  47. 47
    bill Says:

    chk partner pxp up 12 % today as they sold some assets off to oxy

    Pursuant to that certain Purchase and Sale Agreement dated September 24, 2008, among Plains Exploration & Production Company (“PXP”), certain of it subsidiaries, and OXY USA Inc. (“OXY”), we are selling certain assets to OXY for $1.25 billion. We expect to complete the sale, which is subject to customary closing conditions, on December 1, 2008. Effective upon the closing of such sale, certain modifications to PXP’s Amended and Restated Credit Agreement (the “Credit Facility”) will occur.

    Pursuant to a letter agreement dated October 22, 2008, between PXP and JPMorgan Chase Bank, N.A., as administrative agent (“JPMorgan”), the borrowing base will decrease from $3.1 billion to $2.7 billion. The borrowing base will remain subject to the redetermination provisions in the Credit Facility. Upon the receipt of $1.25 billion from the asset sale, PXP will voluntarily reduce the aggregate commitments of the lenders under the Credit Facility from $2.7 billion to $2.3 billion. Both of these modifications will be effective upon the closing of the asset sale to OXY. The other terms and conditions of the Credit Facility are the same.

  48. 48
    zman Says:

    gasoline still showing flat with last week at just over 9 mm bpd.

    Stocks are off a bit but that coincides with a drop in the S&P. Still all green.

    Not a lot of bearish stuff in that report, kind of so, so and nothing to argue against another OPEC production cut if prices don’t hang in there.

  49. 49
    zman Says:

    PXP – that’s an old sale announcement, just completing a sale of assets they started selling to OXY last year. Pricing was somewhat poor but probably on par for what things are trading for now.

  50. 50
    zman Says:

    Analysts very happy with WLT call.

  51. 51
    Bleemus Says:

    SNG Canadian Superior Energy’s “Endeavour” well offshore Trinidad poised to reach total depth (1.39 +0.20)

    Co announces that it along with its partners, BG International Limited and Challenger Energy (CHQ), have successfully run and cemented in place the 9-7/8″ intermediate casing string in the “Endeavour” well, to a depth of approximately 14,492 feet subsea, and that drilling is about to commence in the final hole section in the well.

  52. 52
    BirdsofpreyRcool Says:

    Berry Petroleum reported today. Good results. But company added that they are releasing 8 of the 12 rigs they had drilling in 3Q08. Company thinks they can maintain current production levels into 1Q09 and generate FCF to pay down debt.

    So, 8 more rigs kicked to the curb.

  53. 53
    zman Says:

    Thanks Bleemus, I know Doc is long that name. You in too?

  54. 54
    zman Says:

    ZTRADE: Out half SWN November $25 Calls (SWNKE) for $7.50 up 114% since entry yesterday. Will play with “house money” into earnings tonight.

  55. 55
    Bleemus Says:

    Not in it. The name came up on a price move scan. I love Trinidad though! Steel drums! πŸ™‚

  56. 56
    zman Says:

    Thanks Bird, saw they reported, had not yet looked at PR. They are E.Tx Haynesville (Bossier) guys now too in addition to all that Kern County Crude (W. Coast heavy oil).

  57. 57
    1520sbroad Says:

    APL from buy to sell at Citi today. Cited big swing in crude prices (hurts APL’s pricing for NGL) possibility for div cuts down the line, possibility for debt covenant issues if crude averages under $60 for an extended period

  58. 58
    sane Says:

    API

    Crude Up 1.4M
    Gasoline Down 817K
    Distillates UP 2.6M

  59. 59
    zman Says:

    Bleemus – Its been a boon for EOG as they produce a ton of gas from Trinidad. Used to be very low $/Mcf but that has changed in the last 2 years.

    Bill – re CHK, not sure if they would do that…potentially for manipulation scrutiny isn’t worth the risk.

  60. 60
    zman Says:

    Thanks Sane, pretty confirming this week.

    Broad market thinking about stinking up the day. May have to go ahead lose those CVX here but will wait to see if energy land’s immunity (except for the refiners) continues.

  61. 61
    tater Says:

    CVX – Just looked at the volume spikes on the 15 min chart since Oct 16, either last hour or first hour. Makes me think a big guy wants in. It’s tough for them to mask that kind of buying. I don’t watch the ticker, but that could be confirmed with a review of the trading. It reminds me of NOV’s trip up. The buying spikes were very obvious.

  62. 62
    zman Says:

    Tater – much appreciated.

  63. 63
    zman Says:

    Bird – re 34. Sorry, this is the best one:

  64. 64
    bill Says:

    do we have any experts on drilling here

    when does a company know if they hit oil or gas when drilling

    do they drill the hole first–

    or do they see it when drilling

  65. 65
    zman Says:

    Bill – We have several. In the simplest of answers, both. You can have a “kick” while drilling to TD (total depth) or you can be logging while drilling (LWD) and see hydrocarbons. Or you can drill to TD, and then need to frac the well to get it to flow. E&P co’s use 2D or 3D seismic to define targets prior to drilling but only drilling is going to let them know if what they thought looked good on the computer is produceable.

  66. 66
    zman Says:

    Rally in Sept durable goods, that’s odd.

    http://biz.yahoo.com/ap/081029/economy.html

  67. 67
    Dman Says:

    Z – I gather you are happy to hold the UNG Dec $33 calls here?

  68. 68
    zman Says:

    Dman – I am not unhappy with them. If I add it will be closer strike calls.

  69. 69
    zman Says:

    FBR – reiterating their FSLR buy rating, lowering price target to $170 from $210 today.

    Crude up $5+, energy groups once again place to be.

    GMXR getting big % bounce on the day, and SD, gains starting to filter down to smaller names, too fast in my opinion but they went down too far as well.

    HK up another 12% today…Eagle Ford shale is going to be another big source of growth for these guys, economic too, while others are cutting back. It may be to them what the Fayetteville was to SWN (a shale where they have clear, first mover status but with the added benefit of having locked up the core acreage).

    CHK clearly benefiting from what looks like a beneficial close on November gas.

  70. 70
    bill Says:

    z thanks for 65

    pxp up 20 % now

    i added chk calls prior to ernings

    looks like they reduced knockout for 2008 to 35 b from 138 at prices of 5.45 to 6.50

    so go go go ng to 6.50!!

    Also it looks like they unwound some hedges

  71. 71
    zman Says:

    ZTRADE: $10KP Trade. Sold DO December $80 Calls (DOLP) for $11.40, up 315% since entry on 10/23. Just felt like it had done better than I expected in a far shorter amount of time.

  72. 72
    1520sbroad Says:

    Z- any read on HDDs from last week?

  73. 73
    zman Says:

    Isle – they were abnormally high last week (cold). There is a chart of them in Monday’s post:

    http://zmansenergybrain.com/2008/10/27/another-monday-meltdown/

  74. 74
    1520sbroad Says:

    thanks – i was on the road on monday so i missed the whole post.

  75. 75
    Bleemus Says:

    HDD is gonna go up quite a bit. We had a RARE frost here this morning in South Carolina. The hum of heat pumps fills the air.

  76. 76
    zman Says:

    Bleemus, yep, we may see a withdrawal from storage next week which is about on time, despite the extra production. Generally the expectation of the first withdrawal of the season boosts prices and this is a guesstimate b/c I have not done the math but the boost is generally in a range of 5% to 15%.

    Quiet trading, waiting on Fed.

  77. 77
    zman Says:

    Dollar down 2.6% by the way.

  78. 78
    zman Says:

    ZTRADE: $10KP Trade

    Sold all (5) of the CVX November $70 Calls (CVXKN) for $5.70, up 171% since entry on 10/16. Just lightening up a little pre Fed decision and after a nice run. Will add back if things tank post Fed as the flight to “big cap household names” theory still holds in energy.

  79. 79
    BirdsofpreyRcool Says:

    credit market thinking: sell a 50 bps move. But a 75 bps might sustain a longer rally.

    Seems to be what everyone is thinking, anyway

  80. 80
    zman Says:

    Well, hopefully Ben thinking that way too. I don’t think the actual fundamental impact will matter of either one so might as well run out of bullets sooner rather than later.

    Cash position in the 10KP now just north of $10,000 with the account valued at $16,600.

  81. 81
    BirdsofpreyRcool Says:

    as of right now, fed fund futures are saying 100% chance of 75 bps and 50% chance of 100 bps.

    if this is true, 50 bps is gonna look pretty ineffectual (not that a rate cut means much more than a willingness to recognize that the economy is weak)

    there was a comment the other day that the futures market is no longer a good indicator of what people are thinking… but, that’s what it’s saying right now.

  82. 82
    BirdsofpreyRcool Says:

    z – regardless of market’s reaction to the Fed today, it is just plain wise to book profits. great trading, on your part.

  83. 83
    zman Says:

    Thanks Bird.

    Stocks moving up sharply into Fed. Still pretty good chance of a sell the news event.

    November natural gas at 6.56 with 45 minutes in the NYMEX session. CHK would like to see a close above 6.28.

  84. 84
    zman Says:

    may take a little COP instead of CVX as the market will see them in the same light for a quick rally if it looks like we are to have one, tighter spreads on the options.

  85. 85
    BirdsofpreyRcool Says:

    i don’t think rally will hold….

  86. 86
    cargocult Says:

    Anyone know why APL is down 18% today?

  87. 87
    zman Says:

    Re APL – citi cut it to sell this morning.

    Half point cut from the Fed.

  88. 88
    BirdsofpreyRcool Says:

    IG tighter ar 208, so far, holding in

  89. 89
    BirdsofpreyRcool Says:

    IG 206

  90. 90
    zman Says:

    Being patient here, letting “them” pick the market direction. Looks like headfake up then move lower. May buy another position in a Major in a bit.

  91. 91
    BirdsofpreyRcool Says:

    IG 210… rats

  92. 92
    Dman Says:

    Any free real-time NG quote available? Usually I just watch UNG but with the CHK issue I’d like to watch the real thing…

  93. 93
    zman Says:

    XOM reports after close today. Mulling an add but still patient.

    Dman – none that I know of that are free. Here are all the NG contracts but they are delayed.

    http://www2.barchart.com/dfutpage.asp?sym=ng

    With only a few minutes to go it looks like it will easily clear 6.28 with it flat lining around 6.45.

  94. 94
    Dman Says:

    Market seems pretty confused about what it should be doing here …

  95. 95
    BirdsofpreyRcool Says:

    z – what would Max Pain do here, you think?

  96. 96
    BirdsofpreyRcool Says:

    i think Smart Money is cautious and/or short. So, Max Pain would like it to rally.

    this is a really tough “game” to play. it’s not really a fundamental call here at all.

  97. 97
    Dman Says:

    Feel like I oughta send Aubrey a congratulatory note on a very precisely calculated hedge … πŸ™‚

  98. 98
    zman Says:

    ZTRADE: $10KP Trade

    Added (5) XOM December Calls (XOMLP) for $4.30 with the stock down about $0.60 on the day as the Dow and broad markets react at least initially in negative fashion to the Fed 50 basis point cut.

  99. 99
    BirdsofpreyRcool Says:

    IG 211… credit has decided to be fundamental about it.

  100. 100
    zman Says:

    Bird re max pain, not sure for broad market. But this is the biggest 1 day move in the dollar in quite some time, over 2.5% down today. Feels like change.

  101. 101
    BirdsofpreyRcool Says:

    z – true on the $. but, it’s coming off quite a run up over the last two months. that said, i do believe (for the sake of the US economy) that we need a WEAK dollar. so, glad to see it down over 2.5% today.

  102. 102
    BirdsofpreyRcool Says:

    sorry to be reporting “all over the place here,” but the credit desk comments as follows:

    “everyone was talking bout a sell-off post the Fed… wasn’t that it?? feels like it can all rip tighter again”

  103. 103
    BirdsofpreyRcool Says:

    IG 208 1/2

  104. 104
    elduque Says:

    z-What was the dollars difference for CHK

    Mahalo

  105. 105
    zman Says:

    Eld – I think it was around $100mm.

    Bird – agreed re $, big run up that has been punishing for oil prices. Now, it the dollar does fall back and oil does not stay in parity (ie rise) OPEC will get more aggressive with the cuts.

  106. 106
    BirdsofpreyRcool Says:

    IG 207

  107. 107
    BirdsofpreyRcool Says:

    IG 209

  108. 108
    Dman Says:

    Z – is the new XOM position an earnings play?

  109. 109
    antrimshale74 Says:

    Z – Any reason for the selloff on the pipeline names other than the Atlas downgrade? I’m looking at TCLP falling, too, and always thought they were one of the better ones.

  110. 110
    Bleemus Says:

    little off topic but our local port (4th largest container port in US) is struggling a bit. Story….

    http://www.charlestonbusiness.com/dailyjournal/3_263/full-issue.html#13116

  111. 111
    zman Says:

    Dman – Not really though tomorrow could be interesting. In other words, do I have insight into a miss or beat, no, though there has been no warning. These things are over cheap, and it will be interesting to see their cash balance (everybody quotes at $40 billion but that could/should be up) and their buyback thoughts. Could be time to look at the dividend, know they are not liking U.S. natural gas so one has to wonder what’s on their plate in terms of opportunities they see. No debt here either.

  112. 112
    zman Says:

    Antrim – sorry, no idea. I’m not much of a pipe transportation guy.

    Bleemus – thanks for the color, not off topic at all.

  113. 113
    zman Says:

    …and then the market yawned.

  114. 114
    zman Says:

    I typed too soon. Dow went from flat to up 160. What in the world?!

  115. 115
    Dman Says:

    I think Cramer has it right in a column today: with energy and commodities up, there’s a pause in hedgie annihilation & so the selling pressure we’ve gotten used to goes away. Leaving all that cash on the sidelines. Add in a little performance anxiety amongst managers & you can get a rally.

  116. 116
    Dman Says:

    Am I hallucinating or is the OIH up 13% ?

  117. 117
    zman Says:

    ZTRADE: $10KP Trade. Sold the (3) XOM $70 calls for $9.40, up 137%. Holding the Decembers from the prior trade through earnings but felt it would not be prudent to have too much in the name before numbers.

  118. 118
    zman Says:

    Dman – you are not wrong and that seems a bit nutty to me, the lack of selectivity will only be a problem for the group in the next few days.

    Oil ups $6.25 including after hours.

    I show November NG closed at 6.469.

  119. 119
    occam Says:

    You mentioned looking into TXCO a couple of weeks ago. Any thoughts?

  120. 120
    Dman Says:

    VIX and VXO both in mid 60s. That does seem to jive with the apparent shift in market vibe.

  121. 121
    Dman Says:

    CLB up 13.8%. It’s been ramping steadily all day, ignoring FOMC & everything else, just a steady march up. Someone wants in I guess.

  122. 122
    zman Says:

    Occam – TXCO got lost in the maelstrom of my head and this market. I liked what I heard in their breakout session in San Francisco but I have not given it furth thought.

  123. 123
    BirdsofpreyRcool Says:

    IG 205

  124. 124
    Dman Says:

    Classic Jim Rogers interview from 24 Oct:

    http://au.youtube.com/watch?v=mBVC3H8Pgc4

  125. 125
    zman Says:

    Wow. From up 250 to up less than 50 in under 3 minutes…one of the weirdest trading markets I recall.

  126. 126
    antrimshale74 Says:

    Reminds me of Monday. Well, there’s your selling.

  127. 127
    elduque Says:

    z- When you were looking at MLP’s. Did you look at APL and if you didn’t would you mind taking a quick look at it.

    Mahalo

  128. 128
    BirdsofpreyRcool Says:

    “everyone” was short, post-Fed… so, shorts got squeezed. Then longs felt confident enough to step in, so now they are getting pounded.

    the saga continues

    IG 207

  129. 129
    Dman Says:

    So much for a pause in the redemptions. Hmmm.

  130. 130
    zman Says:

    El-d,

    Sorry I didn’t and that’s not really in my area…afraid I would not be of much use to you as pipeline companies are a different ball of wax entirely. I only looked at the producing MLPs.

  131. 131
    Dman Says:

    You know the market is crazy when the after hours trading is less erratic than the main session.

  132. 132
    BirdsofpreyRcool Says:

    mrkt sell off being attributed to GE saying that 2009 profit will be same as 2008, about 10 mins before close.

    sure doesn’t take much, these days.

  133. 133
    zman Says:

    FSLR: top and bottom line beat, no guidance or color at all in the press release, stock trading off $5 from the close. Conf Call at 4:30 EST today

  134. 134
    Dman Says:

    Amazing that GE makes that announcement at 3.52 pm. It couldn’t wait another 8 minutes?

  135. 135
    zman Says:

    Hear ya, Dman. At least energy mostly failed to notice.

  136. 136
    zman Says:

    Nutty after hours trading in FSLR, now 119…was 115 at close and 110 shortly after press release. People need to slow down, read, think etc.

  137. 137
    bill Says:

    looks like manipulation of ng to close below 6.50

  138. 138
    bill Says:

    nov up .29 while dec up 45

  139. 139
    Wyoming Says:

    bill,

    re 64 for an exploration well;

    Seismic indicates best possible location to drill a well. Well is spud and several strings will be run, protect surface water, prevent mud loss from weak zones while penetrating higher pressured ones etc.. Drilling through pay, Z is correct MWD (measurement while drilling may be involved, mud is heavier than formation so a mud log could be run showing drilling breaks, back ground gas, fluorescence for oil, rock type and others. Open hole electric log will provide a lot more data, MWD is limited to the data it is capable of acquiring. Vertical Seismic Profile could be run to tie into the 3D seismic shot before drilling etc..

    Tell me if you want more detail or have any more questions.

    Type oil drilling in wikipedia for more details too. There are sub sections for logging etc.

    Of course development wells are pretty well known and usually don’t have any logs or a simple gamma ray to correlate.

  140. 140
    BirdsofpreyRcool Says:

    GE says they are not sure where the GE quote came from because it was not from Jeff Immelt – CNBC

    WOW

  141. 141
    BirdsofpreyRcool Says:

    last comment for the day (promise)… CDS trading desk says:

    “… going long for a trade. Probably long and wrong… but want to have a tight stop out. Think that a lot of people thought we would puke today and we didn’t. I guess i’m ignoring the last few minutes of the day. Feels like the street got short yest and tried to get out of it today all at once. Then when there were no bids they tried to push the mkt wider. All smoke and mirrors.”

    Translation: institutional credit trading desk thinks the market is going up tomorrow.

    Reaction: that would be nice.

  142. 142
    Bleemus Says:

    TSO Tesoro beats by $0.15, beats on revs (9.90 +0.29)

  143. 143
    zman Says:

    FSLR now 105. They postponed their analyst meeting to focus on the business. That’s a rookie move on their part in my book. In this market the reaction will likely be to puke up the shares.

  144. 144
    Dman Says:

    #135 True, energy didn’t track most of the Dow power-dive.

    #140 Shorts up to no good? Fake Immelt comments?

    ???

    I feel I’m starting to overuse words like “crazy” and “nutty” …suggestions welcome for new adjectives

  145. 145
    isleworth Says:

    Z – TSO margins expand 65% over Q2 – profit up nicely. Time to start a toe in on these refiners?

  146. 146
    zman Says:

    Isle – need to read and listen to the call…don’t see a rush here. On FSLR call now, will look at TSO in a bit.

  147. 147
    zman Says:

    EVEP ups distribution to 0.75 from 0.70 per quarter. Implies a 18.5% yield based on the close.

  148. 148
    zman Says:

    FSLR at 129. Nutty nutty nutty market.

  149. 149
    zman Says:

    FSLR:

    Make that 135. Conference call ended. In a nutshell, built cash, cost per megawatt fell to just about a buck, guidance is very conservative and its obvious numbers will be coming up for op cost improvement and much better than expected tax rate for 2009 and 2010. Channel checks with customers look very good.

  150. 150
    doc Says:

    the new issue of forbes has a good article on ecana.

  151. 151
    tater Says:

    Anybody looking for a good opinion on the likelihood of mergers and acquisitions in the oil patch should look at the OXY earnings call transcript. Skip to page 8 and start with the question from Manuel Helm and the next q after that. Take you about 3 minutes. (Basically the little guys are currently asking too much and CEO believes that by early 2009 they may be bled dry).
    http://seekingalpha.com/article/102493-occidental-petroleum-corporation-q3-2008-earnings-call-transcript?source=wl_sidebar_search&page=8

  152. 152
    zman Says:

    Wiki holdings, 10kp, and Zeb Perf tabs updated.

    10kp at $16,100 and 67% ($10,700) in cash.

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