29
Oct
Wednesday – Fed + Oil Data = Volatility
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:
- Holdings Watch
- Commodity Watch
- Oil Inventory Report Preview
- Stuff We Care About Today
- 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,
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.
October 29th, 2008 at 8:31 amNovember natural gas up 26 cents to $6.45 for those of you keeping score as it relates to CHK’s $6.28 knockout hedges.
October 29th, 2008 at 8:32 amknock, knock, this thing on?
October 29th, 2008 at 8:36 amyes
October 29th, 2008 at 8:41 amThanks 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.
October 29th, 2008 at 8:43 amz – 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.
October 29th, 2008 at 8:44 amGreat 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!!!
October 29th, 2008 at 8:46 amTater – next it’ll be the airlines, should say airline as we look to be heading into no competition allowed, all one provider land.
October 29th, 2008 at 8:48 amSorry, just had the second cup. I’ll try to keep focussed on making money.
October 29th, 2008 at 8:50 amNew 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…
October 29th, 2008 at 8:50 amTater – 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.
October 29th, 2008 at 8:51 amIG 212 1/2
October 29th, 2008 at 8:51 amGood morning comrades!
October 29th, 2008 at 8:51 amGary = 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.
October 29th, 2008 at 8:55 amTo 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.
October 29th, 2008 at 8:59 amI 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.
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.
October 29th, 2008 at 9:03 amFor those of you who don’t know, Tater’s charts are located under the Tater’s TA link at upper right.
October 29th, 2008 at 9:05 amListening 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.
October 29th, 2008 at 9:11 amGo 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.
October 29th, 2008 at 9:13 amHi 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.
October 29th, 2008 at 9:15 amNo inventory #’s today???
October 29th, 2008 at 9:16 amIG 210… shorts are squirming a bit
October 29th, 2008 at 9:17 amDman – 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.
October 29th, 2008 at 9:18 amPopeye – numbers out in about 15 minutes.
October 29th, 2008 at 9:18 amBird – After naming yesterday’s post “Fed Rescue Bounce” I toyed with naming today’s “Throw another short on the fire”
October 29th, 2008 at 9:19 amI will very likely add WLT if it will pull back. Q&A about to start.
October 29th, 2008 at 9:20 amCVX 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.
October 29th, 2008 at 9:21 amThanks T. I have ignored Tater’s chart waypoints in the past to my own peril. Much appreciated.
October 29th, 2008 at 9:22 amBut there “should” be support for CVX behind at 70 which is the top of the middle peak of the bottoming “W”.
October 29th, 2008 at 9:23 amThanks 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.
October 29th, 2008 at 9:24 amZ – 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.
October 29th, 2008 at 9:26 am10 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.
October 29th, 2008 at 9:26 amAlso 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).
October 29th, 2008 at 9:27 amz – #25 LOL… one of the best country music songs ever written
http://deemusic.homestead.com/baconbeans.html
October 29th, 2008 at 9:27 amZ,
Could you give me an update on on your view of CHK going forward. Thanks
October 29th, 2008 at 9:27 amMid 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.
October 29th, 2008 at 9:28 amPete – 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.
October 29th, 2008 at 9:31 amE&P and Majors weakening a tad as the EIA report approaches.
October 29th, 2008 at 9:32 amTristone (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.
October 29th, 2008 at 9:32 amTrying 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?)
October 29th, 2008 at 9:34 amDO 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.
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
October 29th, 2008 at 9:34 am…crude is not however. Will be interesting to see if “bearish numbers” mean up crude today as they influence OPEC.
October 29th, 2008 at 9:34 amcrude up 500 k
October 29th, 2008 at 9:35 amgas down 1.5
ho up 2.3
October 29th, 2008 at 9:35 amso bullish
crude spiked a buck then backed off
October 29th, 2008 at 9:36 amcrude: 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
October 29th, 2008 at 9:36 amchk 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.
October 29th, 2008 at 9:39 amgasoline 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.
October 29th, 2008 at 9:40 amPXP – 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.
October 29th, 2008 at 9:42 amAnalysts very happy with WLT call.
October 29th, 2008 at 9:45 amSNG 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.
October 29th, 2008 at 9:47 amBerry 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.
October 29th, 2008 at 9:47 amThanks Bleemus, I know Doc is long that name. You in too?
October 29th, 2008 at 9:48 amZTRADE: Out half SWN November $25 Calls (SWNKE) for $7.50 up 114% since entry yesterday. Will play with “house money” into earnings tonight.
October 29th, 2008 at 9:50 amNot in it. The name came up on a price move scan. I love Trinidad though! Steel drums! 🙂
October 29th, 2008 at 9:50 amThanks 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).
October 29th, 2008 at 9:52 amAPL 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
October 29th, 2008 at 9:52 amAPI
Crude Up 1.4M
October 29th, 2008 at 9:54 amGasoline Down 817K
Distillates UP 2.6M
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.
October 29th, 2008 at 9:55 amThanks 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.
October 29th, 2008 at 9:57 amCVX – 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.
October 29th, 2008 at 10:05 amTater – much appreciated.
October 29th, 2008 at 10:08 amBird – re 34. Sorry, this is the best one:
October 29th, 2008 at 10:12 am
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
October 29th, 2008 at 10:13 amBill – 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.
October 29th, 2008 at 10:16 amRally in Sept durable goods, that’s odd.
http://biz.yahoo.com/ap/081029/economy.html
October 29th, 2008 at 10:29 amZ – I gather you are happy to hold the UNG Dec $33 calls here?
October 29th, 2008 at 10:32 amDman – I am not unhappy with them. If I add it will be closer strike calls.
October 29th, 2008 at 10:34 amFBR – 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.
October 29th, 2008 at 10:43 amz 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
October 29th, 2008 at 10:50 amZTRADE: $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.
October 29th, 2008 at 11:07 amZ- any read on HDDs from last week?
October 29th, 2008 at 11:25 amIsle – 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/
October 29th, 2008 at 11:28 amthanks – i was on the road on monday so i missed the whole post.
October 29th, 2008 at 11:31 amHDD 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.
October 29th, 2008 at 11:47 amBleemus, 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.
October 29th, 2008 at 12:03 pmDollar down 2.6% by the way.
October 29th, 2008 at 12:04 pmZTRADE: $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.
October 29th, 2008 at 12:26 pmcredit market thinking: sell a 50 bps move. But a 75 bps might sustain a longer rally.
Seems to be what everyone is thinking, anyway
October 29th, 2008 at 12:32 pmWell, 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.
October 29th, 2008 at 12:34 pmas 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.
October 29th, 2008 at 12:37 pmz – regardless of market’s reaction to the Fed today, it is just plain wise to book profits. great trading, on your part.
October 29th, 2008 at 12:40 pmThanks 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.
October 29th, 2008 at 12:48 pmmay 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.
October 29th, 2008 at 1:13 pmi don’t think rally will hold….
October 29th, 2008 at 1:18 pmAnyone know why APL is down 18% today?
October 29th, 2008 at 1:18 pmRe APL – citi cut it to sell this morning.
Half point cut from the Fed.
October 29th, 2008 at 1:19 pmIG tighter ar 208, so far, holding in
October 29th, 2008 at 1:20 pmIG 206
October 29th, 2008 at 1:21 pmBeing 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.
October 29th, 2008 at 1:23 pmIG 210… rats
October 29th, 2008 at 1:25 pmAny free real-time NG quote available? Usually I just watch UNG but with the CHK issue I’d like to watch the real thing…
October 29th, 2008 at 1:26 pmXOM 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.
October 29th, 2008 at 1:28 pmMarket seems pretty confused about what it should be doing here …
October 29th, 2008 at 1:28 pmz – what would Max Pain do here, you think?
October 29th, 2008 at 1:29 pmi 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.
October 29th, 2008 at 1:31 pmFeel like I oughta send Aubrey a congratulatory note on a very precisely calculated hedge … 🙂
October 29th, 2008 at 1:32 pmZTRADE: $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.
October 29th, 2008 at 1:33 pmIG 211… credit has decided to be fundamental about it.
October 29th, 2008 at 1:33 pmBird 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.
October 29th, 2008 at 1:38 pmz – 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.
October 29th, 2008 at 1:42 pmsorry 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”
October 29th, 2008 at 1:45 pmIG 208 1/2
October 29th, 2008 at 1:45 pmz-What was the dollars difference for CHK
Mahalo
October 29th, 2008 at 1:45 pmEld – 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.
October 29th, 2008 at 1:48 pmIG 207
October 29th, 2008 at 1:49 pmIG 209
October 29th, 2008 at 1:55 pmZ – is the new XOM position an earnings play?
October 29th, 2008 at 1:58 pmZ – 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.
October 29th, 2008 at 1:58 pmlittle 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
October 29th, 2008 at 1:59 pmDman – 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.
October 29th, 2008 at 2:01 pmAntrim – sorry, no idea. I’m not much of a pipe transportation guy.
Bleemus – thanks for the color, not off topic at all.
October 29th, 2008 at 2:02 pm…and then the market yawned.
October 29th, 2008 at 2:13 pmI typed too soon. Dow went from flat to up 160. What in the world?!
October 29th, 2008 at 2:18 pmI 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.
October 29th, 2008 at 2:25 pmAm I hallucinating or is the OIH up 13% ?
October 29th, 2008 at 2:30 pmZTRADE: $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.
October 29th, 2008 at 2:30 pmDman – 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.
October 29th, 2008 at 2:32 pmYou mentioned looking into TXCO a couple of weeks ago. Any thoughts?
October 29th, 2008 at 2:32 pmVIX and VXO both in mid 60s. That does seem to jive with the apparent shift in market vibe.
October 29th, 2008 at 2:36 pmCLB up 13.8%. It’s been ramping steadily all day, ignoring FOMC & everything else, just a steady march up. Someone wants in I guess.
October 29th, 2008 at 2:40 pmOccam – 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.
October 29th, 2008 at 2:40 pmIG 205
October 29th, 2008 at 2:41 pmClassic Jim Rogers interview from 24 Oct:
http://au.youtube.com/watch?v=mBVC3H8Pgc4
October 29th, 2008 at 2:52 pmWow. From up 250 to up less than 50 in under 3 minutes…one of the weirdest trading markets I recall.
October 29th, 2008 at 2:55 pmReminds me of Monday. Well, there’s your selling.
October 29th, 2008 at 2:58 pmz- 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
October 29th, 2008 at 2:58 pm“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
October 29th, 2008 at 2:59 pmSo much for a pause in the redemptions. Hmmm.
October 29th, 2008 at 2:59 pmEl-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.
October 29th, 2008 at 3:01 pmYou know the market is crazy when the after hours trading is less erratic than the main session.
October 29th, 2008 at 3:01 pmmrkt 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.
October 29th, 2008 at 3:05 pmFSLR: 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
October 29th, 2008 at 3:12 pmAmazing that GE makes that announcement at 3.52 pm. It couldn’t wait another 8 minutes?
October 29th, 2008 at 3:25 pmHear ya, Dman. At least energy mostly failed to notice.
October 29th, 2008 at 3:28 pmNutty 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.
October 29th, 2008 at 3:31 pmlooks like manipulation of ng to close below 6.50
October 29th, 2008 at 3:35 pmnov up .29 while dec up 45
October 29th, 2008 at 3:36 pmbill,
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.
October 29th, 2008 at 3:37 pmGE says they are not sure where the GE quote came from because it was not from Jeff Immelt – CNBC
WOW
October 29th, 2008 at 3:37 pmlast 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.
October 29th, 2008 at 3:41 pmTSO Tesoro beats by $0.15, beats on revs (9.90 +0.29)
October 29th, 2008 at 3:43 pmFSLR 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.
October 29th, 2008 at 3:51 pm#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
October 29th, 2008 at 3:55 pmZ – TSO margins expand 65% over Q2 – profit up nicely. Time to start a toe in on these refiners?
October 29th, 2008 at 3:56 pmIsle – 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.
October 29th, 2008 at 3:57 pmEVEP ups distribution to 0.75 from 0.70 per quarter. Implies a 18.5% yield based on the close.
October 29th, 2008 at 4:04 pmFSLR at 129. Nutty nutty nutty market.
October 29th, 2008 at 4:25 pmFSLR:
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.
October 29th, 2008 at 4:31 pmthe new issue of forbes has a good article on ecana.
October 29th, 2008 at 5:19 pmAnybody 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).
October 29th, 2008 at 6:17 pmhttp://seekingalpha.com/article/102493-occidental-petroleum-corporation-q3-2008-earnings-call-transcript?source=wl_sidebar_search&page=8
Wiki holdings, 10kp, and Zeb Perf tabs updated.
10kp at $16,100 and 67% ($10,700) in cash.
October 29th, 2008 at 8:12 pm