T.G.I. A 3 Day Weekend

It's options expiration day so look for incredible levels of volatility. The first swing will be to the upside for the broad market although a miss at (SLB) will weigh on the OIH early.  

Commodity Watch

  • Crude Oil traded off $0.71 to $90.13 yesterday after Fed Chairman Bernanke expressed doubts about the U.S. economy. OPEC can point to the weak U.S. economy and say there is no need to raise production at its Feb 1.  I expect oil to test $87 in the near term but to trade in a range from there to $95 through OPEC's meeting. This morning oil is once again trying to make an early morning bounce without any real news to support it.
  • CERA Reports Global Oil Field Declines Rates Lower Than Previously Thought. The think-tank CERA (Cambridge Energy Research Associates) conducted a study of 811 oil fields scattered about the planet (these represent about 2/3rds of current total production) and determined annual declines are closer to 4.5% than the widely held belief of an average decline rate closer to 8%.  Should have no impact on oil prices although it may make a headline or two. 
  • Natural gas traded in a wide range before and after today's storage report, finally ending off $0.052 to close at $8.081 (with a range of $7.933 to $8.175) on what was essentially an inline withdrawal from storage of 59 Bcf (Street was at 62; I had a range of 40 to 60). Gas is trading up a dime this morning back to yesterday's peak of 8.17. See the gas storage piece from last night for my thoughts on gas or just know that I think it has pretty limited upside in the near term and could be trading mid $7s within the next couple of weeks.

Technical Outlook Watch:

  • XOI - The oiler stocks suffered three of their worst days in recent memory. Support is at 1,300, or 2.5% below current levels. Earnings could be a mixed bag for the index which includes majors in that while their upstream segments will likely beat expectations due to higher than expected oil prices, the refining segment will once again be unusually weak. Were oil to break through the $87 level above I think a wave of selling could take place moving the index down to stronger support at 1,150 (nearly 15% lower).  
  • XNG - The gassy stocks have fared much better than those of the XOI as the recent up move in gas prices and the expectation of a raft of strong earnings reports beginning in earnest in about two weeks has helped mitigate the broader market's influence. That being said, the list of names to own for 4Q earnings has gotten a bit longer as several names (that had weaker charts) broke away from the index over the last three days to the downside. The index is at support now although another round  of broad market wholesale abandon ship selling or a couple of bad gas numbers relative to year ago levels (see last night's gas report here) could drive it down to its next support level at about 520 (or about 1.6% lower than present levels)
  • OIH - Last but not least we come to the service names which have suffered mightily in the last several sessions. We are long a little bit of deep water driller (RIG) which I consider to be fundamentally immune from anything but the most protracted recession scenarios due to the long lead time of deep water projects. Demand in the deep water segment is so high that operators are scrambling to find rigs for work that won't begin until the 2010 to 2012 time frame. But the onshore North American side of the business is in many areas suffering from growing margin compression (see (SLB) comments below). To used an oversimplification to express my point: a lot of capacity has been added to serve the high gas rig count and, as the rig count growth rate has slowed, this has had a negative impact on prices. Good for the XNG above...bad for many service names. In Canada, activity remains poor and the capex outlook bleak due to prevailing low gas prices. Sorry, back to the technicals: this one is pretty ugly and could be driven further south today. Solid support looks to be around 130 (20% below current levels). Again, I'm glad I'm largely not in these at present but will be looking to enter certain names once the dust settles.


Holdings Watch


  • APA Entered the FEB $100 Calls for an average of $3.40.
  • (RIG) Sold the remaining January $1.35 Calls for $0.45. This was the second half of a trade initiated on December 19. The first half was sold for $12 (a little over a double) in early January so this was essentially “house money” but it still stinks to give it back. I still hold the Feb $140 calls here but if I get more enthusiastic on the group or the name I’ll likely add at a lower strike.


  • (FSLR) Closed out the January $160 puts for $1.70, off 62%.
  • (FSLR) Closed out the February $210 puts for $47.70, up 126%.

Stocks We Care About Today Watch:

(SLB) Reports A Slight Miss on Weaker Margins:

  • Reported EPS of $1.11 vs expectations of $1.13. Revenues were actually better than expectations but the company cited weaker pricing in the U.S. and the expensing of some pretty significant startup costs in relation to two projects in Mexico for the margin decline. Moreover, the tax rate was lower than normal which added a few pennies so the "miss" was really a bit larger than it looked.
  •  Normally SLB management adopt an optimistic tone in their quarterly press releases. Today's statements had a bit of a more mute feel to them:

Shorter-term growth presents a more complex picture than the immediate past. Natural gas drilling in North America is not expected to vary greatly in the absence of any severe weather in the remaining winter months. High utilization of the existing offshore rig fleet and limited new builds entering the market during the year will not only limit growth, but also make activity vulnerable to operating efficiency. However, growth in land activity outside North America will remain strong, while seismic exploration services worldwide will remain in high demand both on land and offshore as the industry gears up for the expanding exploration cycle.


  • The stock is called down about $3 bucks in early trading which may be an over-reaction since the longer-term outlook remains positive. This weakness will likely weigh on (HAL), (BJS), (BHI), and the land drillers, in coming days.
  • Conference call today at 9 EST.

NFX Sticks With Existing Bohai Bay Assets: Probably not a big deal either way as the company had previously stated that their exit from their two producing fields did nothing to diminish their interest in being a player in either Bohai Bay or China. It might say something about the offers they received but I sort of doubt that as well. One thing it will do is cause a slight upward adjustment to analyst estimates as they re-adjust their models to take the Bohai discontinued ops line back into account.

(MMR) Reported 4Q Results. Little new from an operation standpoint that I didn't cover in Wednesday's post. The most interesting thing from the PR is the conservative guidance for 2008 which is actually lower than 2007. I think they are bagging the Street a bit here but  from the language employed and given the  high decline rates of the Shelf its a little difficult to tell how much, if any, of Flatrock is in the 2008 volume guidance. Further exploratory success is definitely not in the numbers, ie, there is no exploration wedge factored in.

(PQ) Has Mechanical Difficulties At A South Louisiana Exploration Target. They may re-enter or re-drill (more time and cost) but a decision has not been made yet. Sounds like they learned nothing from the well as the problems occurred above the targeted zones. If it hits the stock I may take some shares as the name is one I like for the long term (see the reports tab). 

Trader Watch:

  • (SU) has fallen from $113 to $90 in the last 10 sessions. While I thought their previous run to such lofty levels was a bit overzealous we could see a nice dead cat bounce here as I don't expect oil to trade much lower over at least the next two weeks. 
  • (BTU) has taken a similar beating which I find completely unjustified, having tumbled from the low $60s to the high $40s over a similar period. I wouldn't bet against a sharp bounce between now and the earnings date (probably early Feb).

Odds & Ends

Analyst Watch: (SM) and (GDP) upped to buy at Sun Trust, (DHT) upped to buy at Citi.

I'll post the 4Q calendar with the wrap over the weekend. The market is closed Monday in observance of Martin Luther King day so have a great holiday everyone! 

111 Responses to “T.G.I. A 3 Day Weekend”

  1. 1
    Sambone Says:

    7:34 am EST

    ICE Brent Crude Climbs $1 On Short Covering

    By Nick Heath

    LONDON — Crude oil futures traded more than $1 higher in London Friday as traders covered short positions.

    A longer weekend in the U.S. spurred the short-covering, while similar activity helped produce a bounce in equity markets to offer support to crude prices.

    But the oil market remains unsettled on worries demand could suffer as more signs of a slowing U.S. economy materialize.

    “The theme remains the same as before, with investors still focusing on the U.S. economy,” said Andrey Kryuchenkov, an analyst at Sucden Research in London.

    At 1222 GMT, the front-month March Brent contract on London’s ICE futures exchange was up $1.12 at $89.87 a barrel.

    The front-month February light, sweet, crude contract on the New York Mercantile Exchange was trading $1 higher at $91.13 a barrel.

    The ICE’s gasoil contract for February delivery was up $6.50 at $792.50 a metric ton, while Nymex gasoline for February delivery was up 350 points at 230.18 cents a gallon.

    —By Nick Heath, Dow Jones Newswires

  2. 2
    Sambone Says:

    Why is APA down premarket?

  3. 3
    freeflow Says:

    Opex day will make back my losses from the month if I get some good mojo.

  4. 4
    zman Says:

    RE APA Don’t know, somebody’s dumping 25k pre open down almost $1.50. No news. Don’t see a broker downgrade. Hopefully its just a panic order from yesterday that still wanted out today and it puts in the low on the stock…very oversold here.

  5. 5
    Brian08 Says:

    Gimmie 12,500 again, poppa wants to short this crap show again…

  6. 6
    zman Says:

    SU & PBR may bounce pretty big here.

    APA shaping up now…thought that was a bid of add odd open.

    Brian – great term: “crapshow!”

  7. 7
    Brian08 Says:

    That’s the PG-13 version of what my college buddies used to call stuff like this…

  8. 8
    zman Says:

    DRYS and dry bulks look to be up to something as well.

    Rates: recovery anyone?


  9. 9
    zman Says:

    So, the market is up because the government is going to go further into debt sending us $800 rebate checks?

  10. 10
    zman Says:

    SLB news weighing HAL (probably not entirely fair) and

    BJS and BHI (may short one or both)

  11. 11
    Sambone Says:

    #9 – Yep, aint it great

  12. 12
    zman Says:

    Sam – great is not the word I’d use, lol.

    Nice reversal on the APA. BHI and BJS chart s look terrible. Wyo, if you’re out there, got any thoughts in light of the SLB release?

    Also, SII which I have thought would be a natural takeout since the GRP merger and which moved much higher without me has given it all back. Glad I’m away from the group except for my RIG.

  13. 13
    Sambone Says:

    Z – Hmmm, I’m getting that feeling again.

  14. 14
    zman Says:

    Re 13: which feeling is that? I hab a code in me ed. Is it that sinking feeling?

  15. 15
    Sambone Says:

    9:45 am EST

    Nymex Crude Rebounds After 3 Losing Days

    By Matt Chambers

    NEW YORK — Crude oil futures were higher Friday after losses in the previous three sessions, spurred by technical buying near $90 a barrel and a resurgent U.S. stock market.

    Light, sweet crude for February delivery on the New York Mercantile Exchange was recently up 44 cents, or 0.5%, at $90.57 a barrel. Brent crude on the ICE futures exchange rose 80 cents to $90.57 a barrel.

    Crude oil prices are down more than 9% since Jan. 2, when they first touched $100 a barrel, pressured by concerns that a slowing U.S. economy will hit energy demand. The slide has been severe, with prices falling for nine of the past 11 sessions. Prices bounced back Friday after being unable to break decisively through $90 a barrel.

    “I think we’re seeing a bit of a correction here, with some technical buying after the falls,” said Michael Cambria, who works for brokerage Eagle Futures on the Nymex floor. “It’s a bit of a spike, but the feeling is that prices are still headed lower.”

    U.S. shares, which have also fallen for the past three days, opened higher after positive fourth quarter results from General Electric (GE) and International Business Machines Corp. (IBM). The Dow Jones Industrial Average was recently up 0.8%. Oil traders have been eyeing the U.S. share market for signs of health of the economy.

    “If the stock market tries to recover, oil might just look a little bit better, but long term the market is probably headed lower,” said Phil Flynn, an analyst at Alaron Trading Corp. in Chicago.

    Front-month February reformulated gasoline blendstock, or RBOB, rose 2.75 cents, or 1.2%, to $2.2943 a gallon. February heating oil rose 1.37 cents, or 0.6%, to $2.5172 a gallon.

    —By Matt Chambers, Dow Jones Newswires

  16. 16
    Sambone Says:

    #14 – Yep, once again.

  17. 17
    zman Says:

    Re: 15 I sent Phil a subscriber last night.

    SII getting just woodshedded now.

    FSLR tried and died. Glad to be out of that nerve racking short. Premiums are nasty but it looks like it will fill that gap at $150 before it can rally meaningfully.

  18. 18
    Nicky Says:

    Morning all. Bush about to announce his fiscal stimulus. I can’ believe they think a few hundred dollars per person is going to make any difference. This market needed a rate cut yesterday and Bernanke is more worried about inflation. We are headed for a depression if he doesn’t get with the program.
    We may still need one more leg down before we can mount this rally which should last for a couple of weeks and that will be the one to short. Or we may have been done yesterday but its not very convincing so far today.

  19. 19
    zman Says:

    Ok, now really glad to be out of FSLR, up $12 (7%) in a heart beat.

    Morning Nicky, hear ya on the not very convincing part. This rally, taken in context of the last 3 days is insignificant and it appears to be fading.

  20. 20
    zman Says:

    rally continuing to fade: Nicky, would you throw up levels for the S&P again?

  21. 21
    Sambone Says:

    Market appears to be going red.

  22. 22
    Nicky Says:

    SPX has support at 1324 Z

  23. 23
    Nicky Says:

    and further support at 1308

  24. 24
    Popeye Says:

    If Bush is going to save the economy this could get ugly.

  25. 25
    Brian08 Says:


  26. 26
    zman Says:

    N – TY for the second level, we’re going to need it.

    Popeye – Adam Smith spinning in his grave.

    Brian – Is this bailout a part Econ101 at Yale?

  27. 27
    Nicky Says:

    SPX making new lows on the day and DOW still above yesterdays lows right now – I am looking for signs of divergence.

  28. 28
    Sambone Says:

    What I find interesting is BAC and WB. Both will report next Tuesday and with the past few days action, the market is telling us something big is going to happen.

  29. 29
    zman Says:

    Sam, given Wamu today and Citi, Merrill last few days weeks, how can those guys say anything better than what JPM did?

  30. 30
    zman Says:

    Morning was a total headfake, I’m reading a little hear and there about better sentiment towards the refiners as we enter maintenance season. My comment would be one week does not a trend make and there could be a bounce in utilization next Wednesday that will send the group lower. I just think its early and though products are in the green today, its been a struggle.

  31. 31
    zman Says:

    Wyo – check your email.

  32. 32
    Sambone Says:

    Ken Lewis BAC – “I’ve had all the fun I can stand in investment banking”.

    Z – I think they will announce something big, because that’s what the market is telling me.

  33. 33
    Nicky Says:

    I don’t see how Bush’s speech is going to turn this market – don’t we already know what’s in it?

  34. 34
    Nicky Says:

    Sam #no 32 – what do you mean by something big?

  35. 35
    Sambone Says:

    N – Well I’m not sure, but they might announce bigger losses than they have previously stated, cut the dividend, big layoffs, etc. I’ve seen WB come in and layoff big departments in one day. When I see market action on these two stocks that I have seen, it tells me the street knows something that others don’t.

  36. 36
    zman Says:

    Nicky – yes, his speech is going to turn the market all right, right into the ground. What do we call this kind of management? It’s not “voodoo economics”, it’s too fast for that. How about “flow through” economics? As in the debt flows right through to your kids.

    MMR made no one happy with their results or their conference call. Just so much debt it may take awhile for them to get people’s (analyst’s) attention on the paydown schedule (reducing debt by half this year is possible with $7 gas and a little bit o luck). Perhaps a test rate from the next Flatrock well will unground it.

  37. 37
    Popeye Says:

    There went 12100.

  38. 38
    zman Says:

    SLB now down 10% and falling. The last time the stock moved like this was last quarter when they actually beat by a couple of pennies. This will force multiple compression across the service companies and of course, its killing the OIH technicals.

    Sam – got any stats on Friday routs pre a 3 day weekend?

  39. 39
    ram Says:

    Z – You mentioned that when the financial guys leave one place they just get a job across the street. There is nothing across the street any more.

  40. 40
    freeflow Says:

    Didn’t someone say the next support for S&P is 1100?

  41. 41
    zman Says:

    Ram – 3 to 6 months from now they’ll all have new slider cards.

  42. 42
    ram Says:

    I’m going to hang onto your quote. HAL at $31 – done going down?

  43. 43
    zman Says:

    Ram – I’m not touching service today. SLB still in freefall, the chart of the OIH ugly, sector rotation on going. Nope, not touching it today.

  44. 44
    Popeye Says:

    CHK is holding up well.

  45. 45
    Nicky Says:

    Still need to see Big Ben come to the rescue for a short term fix…

  46. 46
    Sambone Says:

    I’m suprised Ben didn’t lower this morning.

  47. 47
    Sambone Says:

    Z – Don’t have any stats at the moment. I do think that Tuesday will be very interesting in the overall market. The crowd will be coming off a three day weekend, which gives them plenty of time to read more about MBI, ABK, and the derivative markets. Also BAC and WB will announce. I beginning to believe that the whole financial market will lock up at some point which almost happened with Long Term Capital. This toxic stuff is to wide spread.

  48. 48
    scoop006 Says:

    Z Thoughts on BTU Feb $55C

  49. 49
    Sambone Says:

    11:55 am EST

    Nymex Crude Falls Below $90, Shares Go Negative

    By Matt Chambers

    [Dow Jones] Nymex crude can’t hold on to early gains, which had seen it up more than $1, falling below $90/bbl, an area that has provided strong technical support. Feb crude -17c at $89.96. Feb crude expires Tuesday and the more active Mar contract is -12c at $89.45. The DJIA, gains in which had been supporting oil, is now down 0.5%. (matt.chambers@dowjones.com)

    NEW YORK — Crude oil futures were higher Friday after losses in the previous three sessions, spurred by technical buying near $90 a barrel and a resurgent U.S. stock market.

    Light, sweet crude for February delivery on the New York Mercantile Exchange was recently up 44 cents, or 0.5%, at $90.57 a barrel. Brent crude on the ICE futures exchange rose 80 cents to $90.57 a barrel.

    Crude oil prices are down more than 9% since Jan. 2, when they first touched $100 a barrel, pressured by concerns that a slowing U.S. economy will hit energy demand. The slide has been severe, with prices falling for nine of the past 11 sessions. Prices bounced back Friday after being unable to break decisively through $90 a barrel.

    “I think we’re seeing a bit of a correction here, with some technical buying after the falls,” said Michael Cambria, who works for brokerage Eagle Futures on the Nymex floor. “It’s a bit of a spike, but the feeling is that prices are still headed lower.”

    U.S. shares, which have also fallen for the past three days, opened higher after positive fourth quarter results from General Electric (GE) and International Business Machines Corp. (IBM). The Dow Jones Industrial Average was recently up 0.8%. Oil traders have been eyeing the U.S. share market for signs of health of the economy.

    “If the stock market tries to recover, oil might just look a little bit better, but long term the market is probably headed lower,” said Phil Flynn, an analyst at Alaron Trading Corp. in Chicago.

    Front-month February reformulated gasoline blendstock, or RBOB, rose 2.75 cents, or 1.2%, to $2.2943 a gallon. February heating oil rose 1.37 cents, or 0.6%, to $2.5172 a gallon.

    —By Matt Chambers, Dow Jones Newswires

  50. 50
    zman Says:

    Scoop I like it better Tuesday than today. If you mean for a quick trade then maybe but by Monday we’ll have another set of degree day…where gas goes so often goes coal. Like to see those numbers. And again, I don’t trust this market. If you do want that quick trade the $50s are lower risk.

    Popeye – re CHK holding up…I guess. We were at $40 so many times over the last quarter and every bit of news that’s come has been better than expected (3Q results, year end exit rate, debt deals) that its tough to be down here (again) with gas over $8 and me thinking it doesn’t stay that high. Despite their hedges, they too will ease if gas goes back to $7.50 or so. I’m thinking about throwing caution to the wind for some Feb $37.50s because the cheaper names like this are at least holding up but I think I’m fine with what I’ve got right now.

  51. 51
    Nicky Says:

    Nasdaq is looking a lot stronger than the other indices – maybe a warning shot…

  52. 52
    ram Says:

    Warning shot?

  53. 53
    scoop006 Says:

    Warning shot as in “duck”?

  54. 54
    ychong Says:

    Does anyone think SLB is a good bottom fishing candidate here at the current price of $75.xx?

  55. 55
    Nicky Says:

    Sorry – it may be signalling that market may be starting up out of here….

  56. 56
    ychong Says:

    As soon as I type in the question, SLB took off. Now $76.70.

  57. 57
    Sambone Says:

    Uncle Phil


  58. 58
    zman Says:

    y – re SLB maybe small as a start. A lot depends on a) the market and b) analyst first call notes for Tuesday. Technically it looks like it could head a little lower as it did last time the Street was unhappy with results. Also, they gave little reason for analysts to raise estimates near term which kind of kills the rush. But it might be worth a trade. I see it bouncing with you but check out the DJIA during that short time fraim, tiec for tick, so you’re really just taking a broad market bet with a single name. Again, I think this is overdone but that doesn’t mean it can’t get more over done.

    I do like HAL a little better, valuation aside, the move to greater international focus probably starts to really show this quarter and international demand/pricing has been strong according to SLB. But I’m disinclined to buy either before the holiday in this crazy little market…very much a dice roll.

  59. 59
    zman Says:

    Dow went from down 33 to down 90 while I was typing 58…and I type pretty fast.

  60. 60
    Sambone Says:

    12:50 pm EST

    We Have Nothing To Fear But Greed Itself

    A Dow Jones Newswires Column

    NEW YORK — Life is like this. Just when stock traders get a rip-snortin’ bear market to play with, the major indexes reverse to upside Friday and rain on the trend-followers’ respective parades.

    It turns out that as of this writing, the indexes are making tentative new lows for the move. Even so, I imagine that many traders were wondering if higher trading on the day earlier in this session was the start of something big on the upside.

    I didn’t think so and I don’t now, but I may be wrong.

    An illuminating starting point for sorting out all this is the fact that the indexes earlier Friday were trading in Thursday’s ranges. Some readers may recall that this same technical configuration figured in this column about a week ago in connection with S&P 500 trading near the 1395 technical area. If you missed it — even if you didn’t — I’d say the involved simple idea is worth a repeat.

    The midpoint of the DJIA’s Thursday range between 12517.60 and 12125.60 is 12321.60. Its current Friday intraday high of 12341.50 therefore arguably reflects a failed test of 12321.60 resistance.

    The same calculation applied to the S&P’s 1377.72-1330.67 Thursday range yields 1354.20. The S&P’s Friday intraday high now is 1350.28. Bingo!

    Finally, the mid-point of the Nasdaq Composite’s Thursday range between 2416.50 and 2343.60 is 2380.05. Its Friday intraday high as of this writing is 2384.20.

    The evident practical point is that the indexes are technically weak now despite Friday’s early rally. The calculations above give traders useful stop levels and technical signal points. Many traders, I guess, would want to see a new short-term bull market confirmed by decisive moves above Thursday’s highs.

    I submit that the not-so-practical point of all this is far more valuable. It’s common to say that markets are driven by fear and greed and by U.S. Federal Reserve policy and that market analysis therefore is an exercise in psychology or behaviorism of politics. The people who say as much obviously haven’t done the numbers.

    By the way, it’s also worth repeating that the DJIA is targeting the 11025.90-11018.70 technical band. The S&P is going for a range between 1259.30-1253.00 technical band. And the Nasdaq is pointed down to 2116.10 support.

    —By Stephen Cox, Dow Jones Newswires

  61. 61
    ychong Says:

    Wow, this market is really something! I have been hosed so much in this particular leg of down market trend, I am feeling a lot of pain. When I get this way, I know the bottom must be near (at least temporariliy).

  62. 62
    ram Says:

    Somebody mentioned DRYS would V bottom rather than U bottom. Could this past WED be the bottom?

  63. 63
    zman Says:

    Y – you know from reading my daily ramblings that I’m the same way. But I’d like to see a sideways trade U-shaped bottom for a bit. The V’s are so hard to play.

    I’ll have the earnings list out over the weekend and a very interesting strangle for next week.

    Ram – re DRYS – that was the transportation analyst I had lunch with last week. I know he would tell you that the V will occur between now and Chinese New Year (Feb 8th) and he’d probably tell you that yes, in fact it was the bottom.

  64. 64
    zman Says:

    Bill – any thoughts as to why I shouldn’t try to bottom fish the dry bulks based on the Chinese iron ore negotiations getting worked out prior to Feb 8…which in turn would prompt them to go hunting for tonnage?

  65. 65
    zman Says:

    DRYS: one thing I find puzzling about them is their EPS sensitivity to spot rates. At last check they were about 80% subject to the spot market. As Capesize and Panamax rates went through the last year the analyst estimates were revised up weekly, even as far out as 2009. Rates peaked in November and you really haven’t seen these numbers come down much. Seems odd but I do know that my transport analyst friend is looking for well over the $17.77 eps for 2008 the Street is looking for.

  66. 66
    ram Says:

    Even at $14 EPS, it’s trading for 4X 2008.

  67. 67
    jiveyjr Says:

    sold my HK jan calls…you still holdings yours Z

  68. 68
    Sambone Says:

    Chavez is brilliant! I want to be JUST LIKE HIM!!!!!


  69. 69
    zman Says:

    JY – yes, been watching in the vain hope it gives a jump before the close, lost well over half there for quite a bit of time but will be long again prior to 4Q for sure.

  70. 70
    Nicky Says:

    Sideways congestion implying we will break lower again.

  71. 71
    zman Says:

    somebody wake me when its over…

  72. 72
    Nicky Says:

    we may just see one slightly lower low

  73. 73
    zman Says:

    by the way, natural gas falling through $8 now.

  74. 74
    zman Says:

    Ychong – I’m impressed with the SLB this afternoon. If it doesn’t exceed today’s low on Tuesday I may just nibble.

    Jivey – not getting my wish on HK. Think I’ll exercise, take the stock in and start making a serious habit out of writing calls on the name. Much like my comments on CHK, these guys have done everything right and the company is for sale but unless I see a catalyst, and in these weird market conditions, calls on the smaller names are tough.

  75. 75
    jiveyjr Says:

    like a moron, I wrote puts on NOV @ $70…so I’ll be a proud owner of a tranche soon

  76. 76
    Sambone Says:

    Crowd may be out of the patch I’m thinking.

  77. 77
    zman Says:

    J – ouch. Been there before on something I couldn’t afford to hold (without putting up my house that is) and the guy who called me on Saturday said you have two choices: a) you just don’t exercise and forget about your $ in the option or b) exercise and sell the stock at the open (or any time before the close) and you just net out the difference. In my case it was calls, the stock was GOOG, I chickened out (you kind of have to really) and of course it gapped up on Monday’s open. Still, at least I got some sleep that weekend.

  78. 78
    Sambone Says:

    Fitch just downgraded ABK to AA.

  79. 79
    scoop006 Says:

    #78 overrated

  80. 80
    zman Says:

    Hear ya, Scoop …and a little late to the party.

  81. 81
    Nicky Says:

    Anyone for a positive close?

  82. 82
    Nicky Says:

    Cramer calling for the government to buy out the insurers and a 1 percent rate cut and he says this needs to happen this weekend.
    He has a point…

  83. 83
    jiveyjr Says:

    Z…thanks for sharing…my position is small…thought if they put it to me it would certainly be a smaller loss than it is. I will hold the shares unless they break $55 then I’ll take my licking

  84. 84
    Sambone Says:

    S&P just put ABK on Credit watch for possible downgrade.

  85. 85
    Sambone Says:

    N – Not me. I think we’ll crack 12,000.

  86. 86
    Sambone Says:

    US Stocks Push Toward Bear Market As Support Punches Back


    NEW YORK — The survival of the bull market in stocks hangs in the balance on the charts.

    “All of a sudden everybody’s going to become a technician with the market breaking below support,” said Katie Townshend, chief market technician at MKM Partners.

    On Thursday, the Russell 2000 closed at 680.57, more than 20% below its July peak — the commonly accepted definition of a bear market. At 1333.25, the broad-market gauge of the Standard & Poor’s 500 closed nearly 15% from its October peak. The tech heavy Nasdaq Composite closed at 2347, about 18% from its Halloween high. And the blue-chip Dow Jones Industrial Average closed at 12159.21, also about 14% from its October high.

    “Only Napoleon’s army suffered worse in 100 days,” said Thomas Lee, equity strategist at JPMorgan Chase, in a note.

    The levels to watch for “bear territory” would be 2287 on the Nasdaq Composite, 11332 for the Dow and 1252 for the S&P 500.

    More important to chart watchers, however, is the overall trend. A down trend is defined by making “lower lows,” or breaking below former support levels on each retreat.

    That happened for the S&P 500 when it took out both its 52-week closing intraday low of 1364, which dated back to March, this week. Technicians detect the next support at the May 2006 peak of around 1325, because of the adage that old resistance becomes new support. Indeed, that level may have helped the bounce in Friday’s early morning trading, said Ryan Detrick, senior technical strategist at Schaeffer’s Investment Research.

    But a stronger level is way down at the 1230 mark where buyers moved in after a slide in June 2006.

    On the high end, the index found buyers between 1406 to 1407 in August and November, forming a “double bottom,” and that old support could now be difficult to break through. The thinking is that buyers there in August and November would sell once they can bail out without a loss.

    “There’s no such thing as a triple bottom in stocks,” said Andrew Burkly, market strategist at Brown Brothers Harriman. When the August and November rebounds failed, buyers lost faith in the up trend and the market’s ability to stairstep higher, Burkly said.

    To Detrick, the fate of the S&P 500 — and the bull market in stocks — hinges on which breaks first, the 1325 support or the resistance around 1400.

    “Let’s say we consolidate for a month or so, and then see where it goes,” Detrick said. “If we go below 1325, that’s real bearish and if we head above 1400, it could be a bull market.”

    The DJIA and the Nasdaq have not broken down to the same extent as the S&P 500. The tech average fell below its August lows of 2369, but is still fighting above its 52-week low of 2331.57, where it could bounce again.

    Similarly the Dow’s 52-week intraday low of 11927 could form support. To Detrick, the round number of 12000 should hold if the Dow can avoid a down trend.

    Townshend remains cautiously optimistic, given a rise in contrarian indicators. The Chicago Board Options Exchange Volatility Index has spiked in recent sessions, indicating elevated fears. And put/call ratios are rising, as traders protect their positions by buying bearish puts.

    Rebounds in March and August were preceded by a similar phenomena, Townshend said.

    “When the market’s full of fear that’s when lows tend to be established; when market’s full of greed, that’s when highs tend to be established,” Townshend said.

    Also, given the market’s susceptibility to “whiplash” rallies over the last few weeks, Townshend is waiting for confirmation of the recent breakdown.

    — Rob Curran

  87. 87
    scoop006 Says:

    #82 From a practical perspective Cramer is absolutely correct, considering the losses the economy will sustain if any of the large financial institutions become insolvent.

  88. 88
    zman Says:

    J – Hear ya. It is amazing how fast the OIH turned down. I very nearly stepped into SII at $70 about a week ago, bits and mud, what could be more simple? Made sense after the last merger that it would be next, at least to me it does …. and here we are at $58.

    Sambone – that goes back to my earlier thought about Friday / Monday slides or in this case Tuesday. Questions I don’t know the answer to: a) have they ever done an emergency rate cut? I read a lot about the possibility but has it been done? b) and on the weekend?, c) and over a federal holiday?

    Scoop – yeah I guess if you cut a point, “save” the market and inflation kicks up to 5% you can alway raise rates 3 months from now.

  89. 89
    zman Says:

    NFX is a pretty good deal down here, not cheap but worthy of a higher multiple as it transitions…should have a fantastic 4Q report. I assume people didn’t like them keeping the existing production in China. I’ll add it back to the port on Tuesday market willing.

  90. 90
    zman Says:

    Ram – technically on DRYS, isn’t that an almost perfect HnS?

  91. 91
    ram Says:

    Aaaa, yea, what?

  92. 92
    zman Says:

    head and shoulders

  93. 93
    ram Says:

    Oh.. bottom H&S! I hope so.

  94. 94
    freeflow Says:

    What stock isn’t a good deal at these levels?

  95. 95
    ram Says:

    What are clear signs that the Momentum guys are back into a stock before it runs too fast?

  96. 96
    Sambone Says:

    #88 – Not sure.
    What I find is that Fitch waited until Friday afternoon before a long weekend to announce. That’s pretty low. What will be interesting is the conference call on BAC on Tuesday.
    If somebody does buy ABK, it will remind me of Japan. My question is, “Who would want them”? I don’t see the govenment taking them out.

  97. 97
    Sambone Says:

    319 point swing on the Dow today

  98. 98
    Nicky Says:

    Looks like our low is going to come from a lower level early next week. There is nothing to say we don’t crash from here but if we see that spike in volatility that everyone is looking for – maybe those earnings Samborne is talking about will give us the dip Tuesday – then I still believe it will set up a short term buying opportunity.

  99. 99
    zman Says:

    wow did I mistake the ability of SLB to come back from such a beating.

  100. 100
    Bob Says:

    OIH missed it’s August intrady low today by 17 pennies

  101. 101
    zman Says:

    ZTRADE: Out Jan SUN puts for $5, about a double.

    January Scud List:

    a small APA trade,
    CHK $40 calls
    NFX $55 calls
    the second half of my SWN call position
    some PBR $115 calls
    some insanely higher strike DO calls

  102. 102
    zman Says:


    Right and the last time it was down here you got a nice three month rally. Of course, that corresponded to a big jump in crude.

  103. 103
    Sambone Says:

    Tini Time, see ya Tuesday

  104. 104
    zman Says:

    Have a good weekend guys

  105. 105
    apbd Says:

    Go Pats! Best weekend to all.

  106. 106
    Wyoming Says:


    Someone needs to skate around a pond with only a jock strap on. What say in the locker stay in the locker room. Whoever the BJS Spinner is knows what I am talking about.

    SLB should have some good volatility for the day trader types. Probably similar to the May 2006 time frame. They can’t have their GOM boats doing nothing for months in the quarter and meet their numbers. Overseas can’t make up that big of a draft and their overhead is much bigger than everyone else. They brought another frac crew to the Barnett where there is plenty of capacity already. Then they drop their prices 20% below the mom and pops. Relatively speaking, each Barnett Horizontal has around $500-600k in frac costs. One crew needs to pull in at least $2.5mm/month. I believe they have 4 or 5 crews. Also, the tax boys really run the company, they do a lot of funny stuff, especially overseas. The Camco acquisition was free when you consider the taxes they saved.

  107. 107
    Wyoming Says:

    Z is right in his analogy of services.

    RIG first, they are pure offshore (little Jack now with GFS in the mix)

    DO is a good second, little scared, I believe Lowe’s has a good size chunk of them. Get some of the conglomerate for a diverse spread.

    CLB, I’m long this. US E&P’s are dying with the backlog of core analysis work that is in backlog. It really is hard to find a lab to do work for our wells. Think exploration and anything deep water. They have a small part of the commodity world with their Gun division.

    HAL – in this environment will HAL go up to SLB’s multiple or will HAL stay here and SLB pull down to the HAL multiple? This is the Rodney Dangerfield of service co’s.

    CAM / FTI – sure they have some deep water exposure, but they have even more exposure to commodity work. Too much uncertainty for me.

    When the US rebounds (stay away for now) look at RES, ALY, IO, DWSN

  108. 108
    zman Says:

    Re 106: I saw a comment of Wyo’s on the BJs google finance board. That just can’t happen…please stop…it is a violation of the terms of subscribing to the site and more importantly it can discourage discourse. thanks for your attention, that is all.

    Re 107: any thoughts on OII for deep water and maintenance? Stock took a hit after last quarter’s disclosure that 2008 would be a bit of a slow year for repair and inspection as Katrina work wrapped up largely in 2008.

    Also, any thoughts CRR? Stock has been on a slow slide to painland for about a year now, I assume do to North American slackness (primarily Canada) in the proppant division. International sales are strong with little sign of slow and their frac mapping venture is going great guns all over the globe. Do you think we have to wait for Canada to turn before this stock does. Sure seems like this move has been over done. Also, any chance ceramics will get more market share in the shales?

    CHK is the Rodney Dangerfield of E&P companies.

  109. 109
    TTupp Says:

    Chuck Norris has a trade surplus with China.

    this article is priceless, i cant believe boomberg would publish this..


  110. 110
    Wyoming Says:

    First rule is the herd, I learned that with $40k and SLB in May 2006. Second, I think anything that has deepwater and exploration as the primary revenue/service is where to be. OII,DO, RIG if the street starts to run on the additional jack ups then it is out. You know I like CLB, will add more when I think we are done bouncing.

    CRR – I know Kolstad, Gallagher, and Deaton (did not know he was a director). I would stay away or short if you believe gas/US activity will drop short term. It would be a good hedge for a HAL call. 90% of frac market is US, HAL will only get hurt with bad US action, CRR would cover it. CRR has no upside off an International boom. Also, in tight times, engineers will shift to cheaper proppants due to economics. Finally, everyone is coming out with micro-seismic (WFT, SLB, HAL…). The reservoir division is going down.

    CHK – this is your territory. Heard about the number of land men in the Barnett and can’t help but feel we are in another Austin Chalk scenario.

  111. 111
    zman Says:

    Re: CRR thoughts. Thanks. Sounds like they are trying to swing the int’l story through the period of weakness in N. America but to me its a small chunk of business that can’t wag the dog so thanks for the confirmation. Also facing rising production costs which they are attempting to offset by shuttering older facility but that doesn’t look, by the numbers, to dent it much on margins. Wasn’t sure on the mapping if Pinnacle acquisition really had something unique so thanks again.

    Re CHK and “that Austin Chalk feeling”, we’ll know when we see their F&D costs in the next few weeks. One well completed every 15 hours (and when you slow down?…you can’t slow down). You know I like them but I’m going to be more of an opportunistic trader on the name… had been trying to time the breakout from a 2 year base but the stock just can’t get out of its own way. Street less concerned about growth or NAV and more about IRR and balance sheet here. I may trade it like a channeling stock from $36 to $40 with an eye on gas.

    HK – like you said, hard to screw up a lower cotton valley well and extremely low LOE, plus Woodford and Fayetteville coming on…strong results, should be a very good year for them. Going to be routinely writing calls against stock this year. After I buy some for 4Q earnings. After new 3D they are extremely hot for the gray sand in Louisiana.

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