Thursday – Natural Gas Preview and Oil Inventory Review


Sentiment Watch: Time to test the 2009 highs? Could be for the market, definitely for many of our most trafficked in names.

  • Last night, (AA) led off for the DJIA 3Q reporting season with revenue and earnings beats. Moreover, they said all the things investors wanted to hear from supply channel inventory reductions to cost control efforts being on schedule to end market demand stablization and even growth. And the crowd went wild.
  • Jobless claims came in at 521 K this morning versus expectations of 540 K. And the crowd went wilder.
  • Retail sales for September are trickling out and look to be, on the whole, fairly positive or in some cases, not entirely terrible, but this was somewhat expected and by no means telegraphs a bustling Christmas season.
  • Instead of selling into strength yesterday as I had planned, I actually added to a couple of positions on weakness after the EIA's oil inventory report contrasted sharply with Tuesday's bullish looking API numbers. I will take those positions and more back off the table today and tomorrow.  


In Today’s Post:

  1. Holdings Watch
  2. Commodity Watch
  3. Natural Gas Preview
  4. EIA Oil Inventory Review
  5. Stuff We Care About Today
  6. Odds & Ends


Holdings Watch:

  • $10KP II:
    • $16,800
    • 24% Cash

Yesterday's Trades:

  • WLL – Added (10) October $60 Calls (WLLJL) for $1.00 (doubles my position here) with the stock at $58.20. See comments in the post on today’s oil numbers. I will likely take the remaining $55 calls here off the table today.
  • NFX – Added (10) more NFX $45 October calls (NFXJI) for $1.10 with the stock at $44.50, off 2.75% on a weak group day. Risky, will be quick to close this and hold the previously 10, likely into next week.


Commodity Watch:

Crude oil fell after a mixed bag set of data from the EIA (see below) ending the day down $1.31 at $69.57. This morning crude is trading up 75 cents with strong equity futures and renewed slumping in the dollar. The dollar index was again below 76, holding just above this year's low of 75.82 early this morning (Bank of England and the ECB opting to not raise rates this month prompted the dollar to get back above the 76 mark but it is clear that many non-U.S. central banks are contemplating tightening). 

  • Dollar Watch: From Russia With Not So Much Love. The Kremlin says it supports moving away from dollar based crude trading.
  • With A Rebel Yell Watch: MEND vows to start fresh campaign next week as self-imposed cease fire comes to a close.
  • Nutbag Watch: Iran warns gasoline suppliers not to listen to the West ... or else. Or else they will be removed from the list of suppliers Iran buys gasoline from. As in, this will go down in your permanent record. Whatever. Iran imports about 60% of the gasoline it consumes but officials commented that the possibility exists it can support 100% of domestic consumption via domestic refining. Right, by say, cutting consumption by 60%. Oh, nope, can't do that, there might be a coup were you to cut off the people's cheap gas. Looks like Ahmed should have been building a top secret GASOLINE refinery.

Natural gas rose 2 cents to close at $4.90 yesterday. This morning gas is trading at $5 for a third (maybe this one will stick) but inventories are out later today (see below) and the action is pretty moot until we see those.

  • Tropics Watch: Just when you thought it was safe to go back into the water: Tropical Storm Henri. At present, Henri is not well organized and several models suggest it will weaken before it gets to Hispaniola.

Natural Gas Preview

  • My number: 50 - 55 Bcf. Pretty tough to call in the few weeks where demand transitions from cooling demand from gas-fired generation to residential, commercial, and industrial space heating. So not a huge load of confidence looking at this week's number. 
    • History:
      • Last Week: 64 Bcf injection
      • Last Year: 87 Bcf injection
      • 5 Year Average: 71 Bcf injection
    • Weather:

      • CDDs were not really meaningful last week and will become less so as the month progresses.
      • HDDs on the other hand were in line with normal levels and much cooler than the year ago comparable week. A rapid transition from summer to winter will be key in maintaining gas prices near the $5 mark. 
        • 42 last week
        • 39 normal
        • 26 year ago
    • Imports: up 0.1 Bcfgpd from the prior week, down 0.5 Bcfgpd from last year. 
  • Street Consensus: 58 Bcf

EIA Oil Inventory Review

ZComment: Odd looking gasoline build based on highly suspect production number. I'd bet on that reversing out of the numbers next week.  On a positive note, gasoline demand was unseasonably strong, another indication that demand is on the rise although this may be more related to gasoline station inventories than tires on the road.  No matter. Gasoline is no longer in the driver's seat for oil. That task is falling to distillates which are extremely bloated. Demand there is rising too but not fast enough to support further moves in crude. Translation: without further deterioration in the dollar crude will remain range bound. I do expect distillate demand to rise again seasonally in coming weeks and I expect to see a draw on distillates with next week's numbers.




GASOLINE - We'll just skip talking about this week's gasoline data as I simply have no confidence that there is not a bust in it.








Stuff We Care About Today

Tullow Comments on XOM's Jubilee Entry

  • Just to repeat the news of the last few days, XOM is looking at buying out a junior partner in the multi-billion-barrel Jubilee field in the deep waters off Ghana.
  • Tullow said XOM coming into the project adds a bit of credibility (personally I don't think Tullow or APC were doing a bad job without them) and that XOM coming in wasn't likely to pose a threat to the current timetable for first oil in 2010 (ah, that's what the Tullow guy really wanted to say, that the Major known for over-sciencing everything wouldn't slow them down)
  • Tullow, which operates Jubilee, said XOM may operate some of the satellite prospects being looked at right now.
  • APC has a working interest in Jubille and their Venus discovery to the north of Jubilee has spiked interest in the area
  • I continue to say that XOM's interest here is good for APC and for fledging HDY with their large offshore liceances off Guinea to the north of the Guinea/Ghana border.


KOG Production Commentary.

  • KOG has 6 wells on production at this point, West provided an update yesterday from North Dakota data on the production history through August of the first four wells.
  • In a nutshell, production histories are limited to just a few months but nothing is out of the ordinary from what you'd expect with Bakken producers. Flush production followed by rapid decline.
  • Gas volumes are almost entirely flared for now but will contribute to KOG's results in 2010 when they are hooked to sales. The data summarized below is oil only.

CHK Analyst Day - Oct 14. 9am to 4 pm EST.

Conoco Announces Capex Reduction and Plans Asset Sales

  • Cutting capex plan for 2010 relative to 2009 (from 12.5 B back to $11 B). This year the majors were spending more than 2008 or were flat with it despite the fall in the second half of last in commodity prices.
  • Sell stuff. $10 billion in asset rationalizations. Hello LINE’s reasoning for a deal becoming more clear. There is little better than taking the neglected assets of a major who was busy doing other things in foreign lands and applying new technology to those assets with a fresh approach.
  • Raise your dividend.

Odds & Ends

Analyst Watch:

  • (PXP) coverage initiated at Outperform at RBC.

174 Responses to “Thursday – Natural Gas Preview and Oil Inventory Review”

  1. 1
    zman Says:

    Morning Ram, saw your comment on HK on the Wednesday post.

    I’d think it will move with the group today, so a move through $24 is more than likely. Gas numbers need to come in at or below consensus for NG to hold this move back over $5.

  2. 2
    Nicky Says:

    Good morning.

    Will they gap and crap it? Four days now of unfilled gaps now if they don’t which is almost unheard of.

    Metals i think are getting ready for a blow off top – chart just looks and feels that way.

    Dollar starting to make everyone a little uncomfortable – a trader on CNBC early this morning saying if it got out of control the Fed will step in and raise rates – can you imagine what that will do to the stock market!

    Indices playing out as I suggested yesterday. We saw our wave iv pullback and we are now in v up. There are several possible target areas and also some Gann turn dates I have seen mentioned which are 8/9 of Oct and 13/14 of Oct. I will try and post some fib targets later but really although they will provide a guide and we can all say ‘of course’ after the event there are just too many that could provide a potential target. I am just covering the whole area by saying 1080 – 1123!
    I will point out one other count which would have us not making a new high. We would gap up and then it will quickly fade. This would imply that the wave down we saw last week was 1 and we are working on a wave 2 retracement not to take out the previous high. Obviously we are going to know pretty soon whether this is the case.

  3. 3
    zman Says:

    I agree with Art Cashins’ comments re AA this morning, good to see that EPS didn’t come entirely from cost cutting but I’m not sure its a good indicator of what the rest of the DJIA is going to do. Need to see who is next up in the big names to report. I’m pretty sure whoever they are will not be able to say their commodity had the jump in selling price that aluminum did.

  4. 4
    BirdsofpreyRcool Says:

    z — thanks for plotting those KOG production curves. Visuals help… a lot.

    Credit showing a pretty strong uptick this morning… well before Jobless Claims hit, but the lower claims number kicked credit up a notch.

    TechTrader weighing in with a 60/40 long bias this morning.

    HeadTrader liking the AA and SSS reports, so far.

    Credit Market Indices —

    IG 101 1/2 bps

    HY 93 5.8 pts

    AA bonds holding onto some of the huge gains after earnings announcement yesterday. CDS offered at +190 bps now (after trading as tight at +185 on the initial announcement… that was a -30bps move… H-U-G-E positive, for a bond/CDS)

  5. 5
    ram Says:

    Wow, thanks for responding on HK. It seemed that EOG was getting the entire spot light. There are several others that I am rooting for.

  6. 6
    BirdsofpreyRcool Says:

    Catalysts to Watch Today

    · Eco calendar for Thurs Oct 8 – initial jobless claims, continuing claims, wholesale inventories.

    · Corp Calendar for Thurs Oct 8: same-store-sales reports for the month of Sept from the nation’s retailers will be reported. UMC reports Sept sales. Carphone Warehouse has a trading update. Earnings (MAR, PEP). CVX will post interim Q3 earnings after the close tonight.

    · Corp Calendar for Fri Oct 9: earnings (INFY).

    · Bernanke is speaking Thurs Oct 8 (he will discuss the Fed’s balance sheet) and investors will look to him for some color on “exit strategies” (he will most likely echo Kohn’s “low for long” speech from this Wed).

    · Treasury auctions: $12B 30yr sale on Thurs Oct 8

    · Interchange fees – There is a House hearing Thurs morning discussing interchange fees (the House Financial Services Hearing) is conducting the hearing. It starts at 10amET (see link): http://www.house.gov/apps/list/hearing/financialsvcs_dem/fchrCC_100809.shtml

    · BAC – The CEO search committee is expected to meet for the first time later this week, followed by a meeting of the full board Friday (WSJ)

  7. 7
    zman Says:

    Nicky – traders may say that but the Fed can’t raise rates now and hope to get people back to work. Not going to happen. Besides, U.S. exporters love it. Ron Insana was on last night saying rate hikes have historically been ineffective in “saving the dollar”

    Ram – EOG bid set to open at a new high, WLL and NFX looking strong in the pre market among my names. But most things set to open strong. Nicky asks a good question that I don’t have an answer to regarding the market gaps. I’d bet if we take out the tops it runs to a nice round number like 1100 S&P, finds a reason to be disappointed and falls that much harder through each of those gaps. But I’m not a tech guy so what do I know.

  8. 8
    zman Says:

    BOP – any idea when helicopter Ben is chatting?

  9. 9
    zman Says:

    Because the last thing I’d like to see with a week left until Oct expiration is him chatting up the dollar (whether he means it or not).

  10. 10
    zman Says:

    Gold at 1,053. Wow VTZ.

  11. 11
    BirdsofpreyRcool Says:

    You can listen to Ben and enjoy cocktails… he is speaking in Washington at a Fed-hosted conference at 7 pm tonight.

  12. 12
    zman Says:

    Thanks BOP…stepping back from the sell button for a bit, lol.

  13. 13
    bill Says:

    kog- wow fast declines..too bad they flare gas

  14. 14
    zman Says:

    Bill – Not implying they are faster than other Bakken declines, those are pretty typical looking.

  15. 15
    BirdsofpreyRcool Says:

    Some E&C comments from SMH this morning…

    Environmental Regulation – By Hook or by Crook. On September 30th, the Environmental Protection Agency (EPA) announced it would use the Clean Air Act to potentially regulate greenhouse gasses. EPA is using a 2007 Supreme Court decision, Mass. V. EPA ─ which left the door open to potential regulation under the Clean Air Act for greenhouse gasses ─ as the basis for regulatory authority. The EPA would prefer Congress enact legislation to address greenhouse gas restrictions, but said it would issue regulations in lieu of inaction. Given that Congress is still focused on health care reform, it would appear the process industry will have to deal with stricter regulations – by hook or by crook.

    While small businesses will be exempt from any new regulations, the EPA estimates that 14,000 large sources would need to obtain operating permits for greenhouse gases. In addition, 400 new sources and modifications to existing sources would be subject to review each year. The goal of the EPA is to regulate those sources that are responsible for approximately 70% of U.S. greenhouse emissions.

    Capital spending from utilities has slowed in recent quarters from the frantic pace of a few years ago, due in part to economic conditions and regulatory uncertainty. Troubled economic conditions may remain and impact overall capital spending, but environmental spending will continue. Over the next three years, spending for environmental compliance for coal-fired generators looks robust and is likely to be greater than the amount spent for the period 2007-2009, according to IndustrialInfo. Their projections indicate that spending will increase to $13.0 billion for the period 2010-2012, from $11.4 billion from 2007-2009. Much of that spending will be to retrofit older coal plants with scrubbers.

    Infrastructure and power spending remains an important investment theme for E&C companies over the next few years. E&C companies that address the scrubber market benefitted earlier this decade from the boost in environmental spending and should enjoy another round of spending in the next three years. Beneficiaries could include The Shaw Group (SHAW, Buy, PT $34); McDermott International (MDR-Not Rated), and URS Corp (URS-Not Rated).

  16. 16
    john11 Says:

    Got to love this …from Ken Peak’s just out operations update at Contango MCF, his three new Gulf of Mexico prospects are called; Dude, El Duderino, and His Dudeness. As he indicated in last weeks Ogis presentation quite taken with the Big Lebowski.


  17. 17
    Nicky Says:

    Z – I don’t think they can be seen to let the dollar collapse either. This is going to be a mess and will take stocks down with it. What will they have achieved then? Another crashing stock market and a dollar spiralling out of control.

    The Alcoa earnings and the subsequent market ramp based on them is utter nonsense. If you look closely at their numbers and take out tax credits etc they actually barely broke even and that with soaring aluminum prices.

    Retail sales this morning – the majority not quite as bad as expected. What kind of BS is that – they were all still terrible. Consumer credit numbers yesterday tell it all – the consumer is not spending.

    The recovery is smoke and mirros – all they have done create yet another bubble which they are calling a recovery. When the game is finally up there is going to be no way out of the mess they have created.

    Rant over.

  18. 18
    zman Says:

    Oil and NG backing off sharply as futures ease from their highs. Fear in the market entering in that we’ve come too far too fast in retail and elsewhere.

  19. 19
    zman Says:

    Dollar trickle down ok, agree dollar collapse not desirable.

  20. 20
    zman Says:

    Oil red to flat, group has to eye that, bids backing off.

  21. 21
    Nicky Says:

    SPX has resistance at 1067- 1070 and then 1079. Another option is that we top today and pullback to around 1042 into early next week and THEN make a run at new highs next week. Makes sense with the GS earnings out next week. Would coincide with both the Gann dates then!

  22. 22
    zman Says:

    SMH reporting SWN back in business on boardwalk as of 2 days ago, volumes ramping up now. Good for them, CHK, HK, PQ

  23. 23
    zman Says:

    Odd to see oil backing off again, don’t see a comment anywhere, and the dollar has re-weakened again, falling back down through 76.

  24. 24
    zman Says:

    Thanks for those levels Nicky.

    Iran saying it may HALVE the gasoline subsidy for motorists. Last I checked they were paying the equivalent of 12 cents a gallon. That was last year and I haven’t seen a recent price but that won’t go over well with the already disgruntled masses.

  25. 25
    Nicky Says:

    Oil is really interesting. It does not want to go higher and this despite the dollar. Maybe we have something that really is trading on fundamentals finally and what incredible irony that of all things it should be oil which has in the past been a favorite for the speculators. It couldn’t be that the new rules introduced to curb speculation are actually working!
    That said I am not holding my breath on this actually being the case.

  26. 26
    kyleandy Says:

    z – u have idea why WFT so weak this morn. i can;t find any news

  27. 27
    zman Says:

    Re WFT – was reading last night there is increasing concern about their EPS number. They are expanding rapidly in Mexico (margins a concern there) and in Russia. I’ll go back and see if they said more.

  28. 28
    1520sbroad Says:

    z- thought i saw an announcement somewhere for a Q3 preview from CVX coming today or tomorrow? Any truth to this from your sources?

  29. 29
    zman Says:

    Looking back at that, that’s about it. They said an earnings beat would move the stock up significantly but the risk premium has increased. I recall them undercutting bids in Mexico in 2Q to stay busy which may be part of the concern here. Also, last quarter stunk up the room so they may just be worried that management doesn’t have the situation in hand just yet.

    Nice green open, small pullbakc, then a move higher.

    That sound you hear is BOP doing the chicken dance or EOG.

  30. 30
    BirdsofpreyRcool Says:

    Birds of Prey just LOVE to do the Chicken Dance!

    heh, heh, heh

  31. 31
    zman Says:

    COP catching some price target upgrades over the moves they made yesterday. That is the only major I have an interest in trading in now. Nothing so far, somewhat tempting. If gas prices in the NAM start to really look likely they are stabilizing, COP’s big gas exposure will make them a go to name.

    EOG topping 86

  32. 32
    BirdsofpreyRcool Says:

    1520s — I saw a morning note from JPMo that said they expect CVX to put out a 3Q operations update after close today.

  33. 33
    zman Says:

    Crude and NG both flat on the day. 45 minutes until natural gas inventories.

  34. 34
    BirdsofpreyRcool Says:

    Thanks again to Jerome (and west) for providing the P&F color on EOG. Much appreciated!

  35. 35
    1520sbroad Says:

    32 – thanks. I saw that somewhere and didn’t know if it was truth.

    I’ll join the dance with EOG.

  36. 36
    BirdsofpreyRcool Says:

    1520s — on the CVX operational update, I can’t find a company PR on it… just the mention in the JPMo note this am. fwiw.

  37. 37
    zman Says:

    WLL approaching $60. 2009 high was 59.41 so we are in breakout mode there as well.

    NFX within a days trading of its ’09 high

    Getting close to time for me to start cashing some tickets on October calls.

    ROSE quietly to $16.50.

  38. 38
    zman Says:

    SP paused at lower end of Nicky’s resistance.

  39. 39
    zman Says:

    Any word from the bear crowd? Is Kass adding to SP puts?

  40. 40
    BirdsofpreyRcool Says:

    No shame in taking profits. I don’t want to be confused with someone who thinks “everything is just GREAT again.” It’s not. But I have to admit, not heading toward the Abyss feels pretty good too.

    As long as the Credit Markets are supporting this stock market climb, I will ride the train. Credit turns, I will step to the curb. Just to be clear… I am no wild-eyed optimist. Just don’t like to miss a good train ride, when I can snag one.

  41. 41
    zman Says:


    EOG – Half out $85 Calls for $2.50, up 72%.

    WLL – Sold the $55 October calls for $4.90, up 58%. I continue to hold the $60 strikes here but may scale out on further strength.

  42. 42
    zman Says:

    Dollar well off its lows again, sapping strength from the markets, commodities.

  43. 43
    BirdsofpreyRcool Says:

    IG Index backing up after a strong rally this morning… back and fill?

    IG 104 1/2 bps

  44. 44
    BirdsofpreyRcool Says:

    CIT bonds are down this morning. Pimco and Baupost quit the creditors committee last night, leaving Centerbridge, Oaktree, CapRe, and Silver Point. I don’t know Centerbridge personally, but the other 3 are very heavy hitters in the fixed income world. And Oaktree and Silver Point specialize in “distressed” of course. Wonder what the disagreement was…

  45. 45
    BirdsofpreyRcool Says:

    IG 103 1/2… now it’s filling a bit, lending support to the rally.

  46. 46
    zman Says:

    NG off 2 pennies at 4.89. Gas #s in 10 minutes. Gassy stocks definitely among the less green names in the energy space this am. In the event of a sub 50 Bcf number (doubtful but last couple of weeks were a little high to me) the high short interest names are likely to surge: GMXR, GDP, KWK, along with the go to names like SWN who is less hedged than someone like HK.

    In the event of a > 60 Bcf number, gas probably heads back to the mid $4s.

  47. 47
    BirdsofpreyRcool Says:

    #44 erratum — it was REPORTED last night that Pimco and Baupost left the CIT creditor’s committee… the two firms may have actually left several weeks ago.

    The only reason this is worth watching is that a pending CIT ch11 is definitely keeping the bond mrkt on edge. CIT is the largest secured lender to the retail sector… so its health and ultimate resolution has broad implications for the US economy, just as we start to think about Holiday Retail Sales.

  48. 48
    zman Says:

    EIA Natural Gas Inventory report:

    69 Bcf

    NG at time of report: down 4 cents at $4.87

  49. 49
    zman Says:

    Weird number. Like I said in the post, tough during the shoulder.

    Weird trading post number, started to rally. Stocks unaffected so far.

  50. 50
    zman Says:

    Oil running higher now. Very odd given what would normally be called a big brick on the gas number.

  51. 51
    reefguy Says:

    Market does not understand/believe number

  52. 52
    BirdsofpreyRcool Says:

    Fleckenstein Expects to Resume Shorting U.S. Stocks Next Year
    2009-10-08 14:33:19.565 GMT

    By Betty Liu and Elizabeth Stanton
    Oct. 8 (Bloomberg) — William Fleckenstein, the investor who closed his 12-year-old short-selling fund in December, said he expects to resume betting on declines again next year.
    “Next year’s going to be much more difficult in the stock market, so once we get through earnings season and a little later this year, I’m going to be looking for opportunities to get short some, at least to some degree,” Fleckenstein said in a Bloomberg Television interview.
    Future bets against U.S. stocks will “almost certainly”
    include technology companies, especially semiconductor makers, Fleckenstein said.
    “They’re going to report good earnings, but a lot of it is a function of double- and triple-ordering, so their businesses are going to look better than they really are,” he said.
    Fleckenstein owns mostly gold stocks based on the view that U.S. government spending aimed at reviving the economy is eroding the value of the dollar, he said.
    “What we’re doing is trying to print our way to prosperity in this country,” he said. “That won’t work any more than trying to borrow our way to prosperity worked in the real estate bubble and speculating our way to prosperity didn’t work in the stock bubble.”

  53. 53
    zman Says:

    That being said, I don’t put a lot of stock in the numbers for the last 4 weeks or so of injection season. We’re full, that’s known. We probably won’t get much higher than 3.85 Tcf. There is a camp of thinking that goes something like:

    “capacity must be more than we all thought if they can take these record volumes into storage. If that is the case, maybe it is much larger, much closer to the design capacity and no just the logistically feasible capacity. This means less gas turned away by the pipe companies and therefore less chance of prices worsening in individual markets and leading to gas on gas competition.”

    or something like that.

    Reef – that could be the case. Bears have got to be thinking that if gas won’t fall on a number like that, that their position is in jeopardy. It still may fall, that’s not a good number to be sure, but, the writing is on the wall. Declines are coming, the market will be better balanced in 2010 and as intern #2 tells me, that trade was 2000 and eight and now its 2000 and late.

  54. 54
    zman Says:

    Reef – they also all have to be thinking that’s the last of the big trades. Almost looked like the fix was in from 5 seconds before the number hit. Buy no matter what was the call apparently. Gas up 14 cents, above $5 again.

  55. 55
    bloodystupidjohnson Says:

    Will EOG and WLL, which have very similar charts to PXD, follow the price action of PXD?

  56. 56
    reefguy Says:

    Gas number, these shoulder numbers commonly bring errors that are adjusted in the coming weeks…

  57. 57
    zman Says:

    BSJ – Dunno. In general E&Ps track each other. Those three companies are all very different animals though. From different balance sheets with EOG on the conservative end and PXD somewhat less so to upside opportunity (probably WLL edges the other two out their but PXD is getting more interesting in the Eagle Ford and has big leverage on a return to active status in the Spraberry / Wolfcamp (wolfberry). EOG is a premium trader in terms of multiple amongst the large cap E&Ps but is getting oilier which mitigates concern on that front (and its always a bit pricey but has a pristine balance sheet and a very deep inventory of drill ready prospects).

    WLL is your cheap name in the Bakken, drills the biggest wells there is a solid oil camp play where things appear to just get better and better with increased lateral length and frac experience.

  58. 58
    zman Says:

    Reef – Exactly.

  59. 59
    zman Says:


    WLL – Sold the (10) $60 calls taken yesterday for a buck for $2 with the stock at $60.70. I continue to hold the original (10) calls here.

  60. 60
    zman Says:

    News flash: Gnome Seen On Window Ledge

    Jerome – would you please expand on your NFX comment from yesterday with upside levels? Thanks. You wrote:

    “Re: #77, just looking at that, I’m thinking it could, but with no structural damage, from here NFX goes back into o’s on a print of $43 and has a confluence of support at $41”

  61. 61
    elijahwc Says:

    Crossing on briefing.com:

    Today’s In Play
    10:53 EOG EOG Resources: Hearing added as a new SOLAR long at tier 1 firm (87.79 +3.08) -Update-

  62. 62
    zman Says:


  63. 63
    zman Says:

    LINE – back above the closing price from just before they announced the secondary. Strong.

  64. 64
    zman Says:

    RAM – that’s a convincing push through $24 on the HK.

  65. 65
    BirdsofpreyRcool Says:

    My, my, my… a breakout is a beautiful thing. Just sold my EOG calls. Thank you z and Jerome. As you know, I don’t usually play options.

    Have to admit, that was pretty fun, tho.

  66. 66
    zman Says:

    Careful BOP, you might get hooked. Book it and forget it friend. On to the next one.

  67. 67
    zman Says:

    Anyone see what Eli is seeing in 61, I don’t understand that comment. Eli, do you mean Solare or Solar?

  68. 68
    zman Says:

    NG over $5 for the longest amount of time since this rally began last week. Would like to see a close above $5 but I don’t really want to see a big run after that in the immediate term. Sideways trading in the $5.00 to $5.25 region would be best to promote slow short covering as we get into a more demand heavy season.

  69. 69
    john11 Says:

    Stupid acronym…
    Deutsche Bank’s proprietary SOLAR (Shorter-term Opportunities within Long-term Analyst Recommendations) equity research stock list.

  70. 70
    bloodystupidjohnson Says:

    Z, I ask you the other day if your trigger finger was getting itching. It must be on fire now.

  71. 71
    Jerome Blank Says:

    Re: # 60, NFX is currently on a buy signal, it can close its gap created on 10/6 and still comfortably remain in X’s, ie: no technical damage, NFX goes back into o’s only on a print of $43 (short term correction status), it finds strong support at $41, P&F type support and 50 day SMA confluence…from here it goes back to a sell signal on a print of $40, but as of now NFX looks good and remains a buy, target $57.50 (bullish obj long term calculates to $68, but there is major resistance at $57.50)

  72. 72
    zman Says:

    Thanks John – agreed, that’s a dumb name.

    BSJ – I’ve been exercising it this morning and it will get more use in a bit, watching the S&P claw higher.

    Denise – any word from Kass or is he just taking the week off? I really do want to know what he’s thinking. Not throwing a rock at him even though he was pretty smug with his short call on CNBC the other week or so ago.

  73. 73
    bloodystupidjohnson Says:

    Z, sometimes the chartist will take over a stock, regardless of fundies. That was why I asked about EOG, WLL when compared to PXD. I think the chartist have seen a breakout and are playing that breakout.

  74. 74
    zman Says:

    Thanks Jerome. I continue to hold the common there for the long term and trade the options. Thinking to sell it back a bit as I quintupled that little position a week or so ago and then doubled position yesterday.

  75. 75
    VTZ Says:

    Well played on this move Z.

  76. 76
    VTZ Says:

    I heard Kass on CNBC yesterday on Kudlow and he was still bearish.

  77. 77
    Jerome Blank Says:

    Nice to see SD back into a col of x’s with it print of $13.50

  78. 78
    zman Says:

    BSJ – I hear ya and I understand.

    V – thanks. Kass datapoint not surprising, no reason for him to change it from the fundamentals. Just wondering if he is covering now and shorting higher, later.

  79. 79
    VTZ Says:

    He said he was standing by his top at 1050 on the S&P.

  80. 80
    elijahwc Says:

    62: Got to be someones proprietary research branding. I’m just a reporter.

  81. 81
    zman Says:

    Eli – yeah right, me too.

  82. 82
    cargocult Says:

    Thoughts on holding HK long term?

  83. 83
    Jerome Blank Says:

    HK is really interesting…it’s currently on a sell signal, but it’s trying its best to get back into x’s on a print of $25 and generates a new buy signal at $26, but there is major resistance at the buy print, conservative trade would be to wait for a break above $27 to confirm the signal in this case, unusual pattern….these are great stocks to study

  84. 84
    zman Says:

    Cargo – long version or short?

  85. 85
    cargocult Says:

    I’m thinking of exercising my $24’s to add to a small position.

  86. 86
    bloodystupidjohnson Says:

    The one thing that will drive you crazy, if you let it about trading options, is all the what if’s and money left on the table stuff. I sold 10 PXDJH at 3.05 the other day. These had a basis of .75 cents. Now PXDJH is at 4.10 — UGH That is called regret.

    The behavior financial people would have a field day with me.

  87. 87
    Jerome Blank Says:

    IF you look at a daily chart for HK you can see the top side trendline hitting at 6 points since May, if Hk can get back into X’s and push thru the trendline, this timne may be the charm

  88. 88
    BirdsofpreyRcool Says:

    Jerome — any comments on APC here?

  89. 89
    VTZ Says:

    BSJ – I closed some positions Tuesday as well.

  90. 90
    Nicky Says:

    With regards Kass he is not alone with his calls. He will turn out to be right however. The higher this goes the more bearish I get. This is the dot com all over again.

  91. 91
    zman Says:

    Cargo – I own the common and three sets of strikes right now (Oct 24,25,26). The calls are all on the table for me right now.

    As to the common, I hold it for a lot of reasons:
    1) reserve growth this year will probably be >70%. This means that high multiple on a $/Mcfe of proved reserves will be chiseled down massively by year end (probably Feb 15 reserve report). That could be much more if new SEC rules favor them which they should but can’t quantify that now…no rules to look at yet.

    2) Best in Show 2010 production growth. Saying 30 to 40% growth for ’10 but that will very likely go up. Maybe second to SWN, maybe not.

    3) Low cost producer. Keeps falling. Best of Haynesville is under $0.10 / Mcfe. Given their focus on the Haynesville (majority of budget this year and next) that will drag their aggregate LOE down continuously for next 2 years.

    4) Very large drilling inventory. Haynesville craze was good for them but economics are better on the Eagle Ford and they have a big piece of that play

    5) Balance sheet is much improved.

    6) Capital spend is set to be $1 B for next year, in line with 2009. Another $300 mm for pipeline expansion, also in line. This type of spend allows them to get what they want to keep of their Haynesville leasehold under HBP status by mid 2011. So drill now to hold it all regardless of prices and then you transition to a guy who can ease back, more comfortably on the throttle if prices remain weak or re weaken.

    7) Hedges. This is a double edged sword and may hold the stock back relative to their less hedged peers. They have about 70% of their production hedged for 2010 at around $5.50. Again, assure the cash flow to get that acreage under HBP status.

  92. 92
    zman Says:

    BSJ – I never think about the what ifs or the money on the table. That is a rule with me. Close it, take the option ticker off the market watch, move on.

  93. 93
    zman Says:

    Nicky – don’t read me the wrong way, I’m not downing him. I think he’s early and he always says he’s early. Being early as an options guy is more painful than what he does however. If he and the bears capitulate then you will see me go cash heavier than usual and into puts. I am raising cash today and will continue to do so as soon as I stop typing this sentence.

  94. 94
    Nicky Says:

    This may be a b wave for wave iv and we need to come back down to 9750 for c before moving higher again.

  95. 95
    Nicky Says:

    sorry that is dow, spx level would be 1060 ish

  96. 96
    VTZ Says:

    Gold bounced off support at 1045 and dollar resumed downtrend handily now for those keeping score.

  97. 97
    Nicky Says:

    Z – I can’t help wondering what the catalyst is going to be to take this down.
    I would very much doubt Kass will cover. I would think he would be adding. The higher it goes the more insane it looks.
    When it falls it will be like a rock and nobody will have the chance to get out.

  98. 98
    zman Says:


    HK – Sold half (15) of the HK $24 calls for $1.15 (on the mid and easily with the stock at $24.82), up 124%. I continue to hold the other 15 of the $24s as well as $25 and $26 strikes.

    SWN – Sold half of this one as well, out on (15) October $45 calls for $1.05, up 62% with the stock at $44.65, up 4% on the day.

  99. 99
    Jerome Blank Says:

    RE: #88, Hi BOP…WOW, Re APC bears got crushed in that rare P&F “triangle bear trap”, that trade to $59 probably had some adding to shorts, hard to buy when it’s been screaming higher without a breath, any concern with earnings issues on 11/2?

  100. 100
    BirdsofpreyRcool Says:

    Keep your eye on the data… the bond market tends to be more rational than stocks.

    Commercial Paper Market Expands Most in Almost a Year
    2009-10-08 15:47:26.973 GMT

    By Bryan Keogh
    Oct. 8 (Bloomberg) — Corporate borrowing in the U.S.
    commercial paper market expanded the most in almost a year as the economy showed signs of recovering from the longest recession since the 1930s.
    Unsecured commercial paper outstanding climbed $67.6 billion, or 5.5 percent, to a seasonally adjusted $1.3 trillion in the week ended Oct. 7, the highest since May 6, the Federal Reserve said today on its Web site. That’s the biggest percentage increase since the Fed began buying commercial paper directly from companies at the end of October 2008.
    The market expanded for an eighth-straight week as reports signaled the economy is recovering, increasing companies’ need for short-term credit. Retail sales rose for the first time in
    13 months in September and the number of Americans who filed first-time claims for unemployment benefits last week fell to the lowest since January.
    “As the pace of inventory liquidation continues to recede, economic recovery continues to broaden and employment levels are reduced at a slower pace, the need for CP should continue to increase validating, for now, the turn in economic output,” Dan Greenhaus, chief economic strategist at Miller Tabak & Co. in New York, wrote today in a note to clients.
    Financial commercial paper rose $30.6 billion, or 5.1 percent, in the week to $633.2 billion, Fed data show. Short- term debt issued by non-financial companies climbed $27.9 billion, or 26 percent, to $134.1 billion, the biggest increase since at least 2000.
    On a non-seasonally adjusted basis, commercial paper outstanding rose $11.6 billion, or 0.98 percent, to $1.18 trillion, the biggest gain since the week ended Jan. 7, according to the Fed’s Web site.
    Commercial paper, which typically matures in 270 days or less, is used to finance everyday activities such as payroll and rent.

  101. 101
    cargocult Says:

    Thanks, very helpful.

  102. 102
    zman Says:

    Jerome – re APC. I’m in since the Venus discovery the other day. The conference call was not led by Jim Hacket the CEO who is one of the most respected E&P guys around. I count myself as lucky for having had lunch with him way back in the day. But I digress. They are unlikely to miss estimates and should have more data about Venus by then which could really further open up that region off Ghana. These are guys are big hitters in deepwater every where they go. Very smart, usually discounted due to the high debt levels taken when they took out Kerr McGee and Western in a day some years back. I will be coming out of my position and repositioning into longer dated calls sometime in the next 3 weeks.

  103. 103
    BirdsofpreyRcool Says:

    Jerome — I always have concerns. But the overall trend for oil should be up and to the right. So it’s the forward-looking stuff that interests me the most. I am using APC (for the moment) as a proxy on oil prices, combined with the increasing potential for M&A to provide the next mrkt boost. With the credit market opening up just a little more, each week, I think you will see more speculation about “who will Exxon buy?” Not that I think Exxon or BP will buy APC (necessarily)… but, that will be the speculation. So, it’s forward-looking stuff I’m trying to claw through, at the moment.

    Knowing the technicals levels sure helps to focus the attention, tho. So, keep your analysis coming. Thank you!

  104. 104
    Nicky Says:

    As far as I can see they are pouring into bonds and as we are always being told bond traders are far smarter than equity traders. So we have our heads up. Last one out turn the lights off.

  105. 105
    zman Says:


    EOG – Out of the remaining (5) EOG $85 October calls, (EOGJQ), for $4.40, up 198% with the stock sitting just under $89. I’ll reposition here in a week or two for earnings.

  106. 106
    Nicky Says:

    Oil needs to play catch up and fast. I think the move in everything else is nearly done. A few more spikes up for metals – gold 1087 (maybe 1100) silver 18.30 – 18.60 is resistance. Dollar 75.50 maybe as low as 74.50.

  107. 107
    Jerome Blank Says:

    Re: #102, 103, thank you Zman, BOP, so many interesting charts now, it’s hard to know where to look next…

  108. 108
    bloodystupidjohnson Says:

    Z, most years energy has a very definite seasonal biase. First off, do you believe in my seasonal biase statement, and if you do, do you try to play it in any way?

  109. 109
    zman Says:

    BSJ – I’m not that top down. I have my views on oil and gas and coal prices and seasonality enters in for sure. But I don’t play that nearly as much as I play the stock stories/fundamentals themselves.

  110. 110
    zman Says:

    SP through 1070

  111. 111
    zman Says:

    Oil up $2.80 now at 72.40. That’s a bit nutty and the stocks have stopped responding to it. Could see it close up here, open higher tomorrow, again unless Ben defends the dollar again in comments tonight. This would give me further reason to take profits.

  112. 112
    Jerome Blank Says:

    Crude futures hit R2 pivot point intraday resistance at $73.02, which corresponds to major P&F resistance at the same price, huge new P & F buy signal on a print of $74… but there is a wall of friction to overcome to get there…between $73 and $74…

  113. 113
    VTZ Says:

    To be honest Z, I don’t think dollar jawboning is going to help anymore. Confidence is already broken.

  114. 114
    bloodystupidjohnson Says:

    Mark Sellers, a former hedge fund mananger, claims that gassers respond more to rising oil prices than they do to rising nat gas prices. Taken the price action of gassers and comparing them to the price of oil and the price of nat gas, this year that arguement could be made.

  115. 115
    zman Says:

    V – I was only thinking it would provide a 1 or 2 day pop that would be annoying as I close out October positions. Agreed talk ain’t going to cut it.

    BSJ – You could also argue they move with SP500, which oil moves with. It varies from week to week and month to month what they are more closely tied to. They move in the same general direction together but it matters quite a bit if the Street likes growth or capital discipline, hedged or unhedged, leveraged or not at the point in time you are talking about. Of late, the more leveraged, less hedged names and less growthy but perhaps more neglected because of that and now willing to add rigs back group is in the lead. Valuations aren’t high yet on forward CFPS. Those generalizations are constantly evolving.

  116. 116
    zman Says:

    Santelli saying that was not a good 30 year auction.

  117. 117
    Nicky Says:

    Sorry in my doom and gloom mood:

    Great Article :

    From one perspective, companies are lean and mean. Take Alcoa (AA) for example, who reported after the closing bell today. The company has cut 15,000 jobs, has closed several plants, has a 50% cut in capital expenditures – so the cost side of their balance sheet is very low.

    Sure enough, they reported a small profit this quarter, not because of an improving economy, per se, but because of cutting expenses.

    However, even with a falling dollar and the cash for clunkers program where aluminum was needed, AA still saw a 33% drop in revenues. Demand for its products continues to fall and (sigh) is just another sign the consumer is not increasing its demand for AA products.

    So how is the market going to respond to a slew of earnings reports which show companies starting to report profits, but top line revenues still falling?

    The truth is the consumer is still hurting and credit is being denied and frankly this trend is getting worse.

    Today it was announced the August Consumer Credit report plunged $12 billion, which was worst than expected. No surprise here given a falling money supply but what it illustrates is how starved the economy is for capital.

    It follows then that most companies are going to find it difficult to improve their top line numbers this quarter and show robust revenue growth.

    So which is more important, small profits as a result of cost cutting or still falling revenues because of a jobless recovery?

    The Fed has a decision to make. Does it still borrow money to prop up commodity prices and drive oil prices higher to prop up the stock market? Or do they shift their focus on supporting the dollar and counter commodity prices (ruinous for many countries)?

  118. 118
    zman Says:


    ROSE – Sold the (5) November $12.50s for $4.20, up 46%. No knock on the stock but I don’t like how thin this particular strike was. I will likely reposition into November $17.50s or something similar before earnings. I continue to hold the common in the ZLT.

  119. 119
    Nicky Says:

    3 out of the 4 Fast Money guys advising chasing this market higher although they all admitted the data does not support it and it will end badly but stay in until it does. Bulls better be alert 24/7.

  120. 120
    zman Says:

    GDP and GMXR now leading the smid cap E&P gassy name charge for the day. The two most highly shorted names in the group. HK doing much better today as well.

  121. 121
    zman Says:

    Most boring names in energy watch:
    VLO, TSO, WNR, FTO. Too much foreign supply coming on the market next year, products in the U.S. just too well stock piled to give margins any breathing room.

  122. 122
    VTZ Says:

    I wonder what’s going to happen when the whole market goes short. I’m pretty sure absolutely everyone is licking their lips for the opportunity.

    I’m with Nicky all the way here although I’ve forced myself to maintain a few small positions. I pared back this morning again though, not very long anymore but I keep thinking about it.

  123. 123
    zman Says:

    I hear ya V – I was as short on cash (24% of total) as I have been in quite some time yesterday and don’t plan on going back to that level any time soon.

  124. 124
    VTZ Says:

    It paid out bigtime 🙂

  125. 125
    baylor3217 Says:

    Starting to fel piggy in my WLL position up over 15% in a week. Thoughts there? Think we roll over back into the high 50s?

  126. 126
    Jerome Blank Says:

    Watching the 30 min crude oil chart, the last 30 min candle printed a “bearish engulfing pattern” and the first lower high and lower 30 min close of the day, not a rush to the exit by any means, but a clue of possible trouble to keep any eye on… I wonder if the party is over for the day…

  127. 127
    Nicky Says:


    Found this site recently and its interesting. I had heard on various blogs about a trader called Sol who had been on a losing streak in August. Anyway then found the above site and realized it was him.
    You can look at the history of his trades etc but he appears to have started with 500,000k about 10 months ago. In a few months he was up to around 4 million. He then lost big all the way back to 2.5 million. Since early August he has managed to bring this back to 4.5 million(!) which he announced this week having basically traded his backside off. As of this morning he was up to 5 million.
    But they seem to have a ‘system’ which he has been trading and it gives you the alerts. I know he is expecting a big sell signal and had one about half an hour ago which he has subsequently closed out. Anyway may be worth watching as the system has been on fire by the looks of things.

  128. 128
    zman Says:

    On the WLL – its definitely a possibility that it falls back into the lower $50s. I’d bet it tries to hold $60 but it could be an over night event that gaps it lower. The name is still cheap and I’ll be in for earnings but I have scaled back there today and may do a little more either today or in the morning. Watching the SP pretty closely here at 1065.

  129. 129
    zman Says:

    Have a sense they put one more rally on this market late. Will be an interesting close for oil. I’d like to see it hold $71, don’t care about new highs yet.

  130. 130
    BirdsofpreyRcool Says:


    · Equities extend their rally; as of noon, the sp500 ramps >10 points to just under 1070. Our equity desk is seeing real buying on the move this morning, with some shorts getting increasingly nervous (and covering) as we creep back up to those Sep highs. While 3Q earnings season is still its infancy, numbers so far (along w/eco data and retail SSS) have left the bears without any ammo. SP500 cash made a technically important break above 1060 this morning; the recent Sep 29 intraday high is 1070 but the more important level to get through is the Sep 23 high of 1080 (the ultimate high for the Mar-Nov move).

    · A number of positives giving a boost to the market today: 1) Earnings season/retail sales coming in as expected/better than expected (importantly, #s in aggregate are not giving people any excuses to sell/take profits); 2) Optimism that more action will come from Washington, esp. on the housing front (builders ripping ~10% on reports the tax credit will be extended and maybe expanded); 3) Eco data comes in better (the US jobless claims number came in ahead of expectations); 4) Fed speak: in the last few days we have seen officials come out and counter the Warsh WSJ oped tone (inc. Kohn)….Fed’s Fisher just gave a relatively dovish interview to the WSJ and the expectation is Bernanke tonight will reiterate “low for long”; 5) More dollar weakness (the weak dollar has been very supportive of US equity prices); 6) Anticipation of a strong opening in China after that country took the last week off for a national holiday.

    · Equity sectors: financials have been leaders all week and that trend continues today. the sp500 financial index is up ~1%+ on the day and is up nearly 7% this week alone. Commodity linked groups very strong on the weaker buck and AA earnings – energy and materials both up ~2%. Discretionary, industrials both up >1%. Telecom carriers remain big laggards – the group is down another 0.7% today and is off >1.5% on the week (only major group that is in the red).

    · Earnings wrap: AA, PEP, and MAR are the big highlights of the morning (AA up ~2%, off best levels; MAR is flattish while PEP dips ~1%). NTAP just issued strong guidance at today’s analyst meeting (stock rallies ~3.5%).

    · Retail sales wrap: September SSS come in strong as expected with nearly the entire group beating print estimates but for the most part coming inline with real expectations. A number of guidance raises were expected from the group and came from KSS, JCP, ARO, AEO, ROST, TJX, GYMB and CTR.

    · Dollar weakness: the DXY is off 0.7% and breaks under the 76 level = making fresh lows. Australian dollar up ~1.7% against the US buck (strong jobs figures from Australia helping there); European currencies also strong (esp. the euro).

    · Corp credit mixed as IG lags stocks; IG13 is really underperforming equities, with the index actually ~1bp wider this morning as stocks moved to highs. There is some bifurcation going on, however, as HY is acting OK +1/2pt.

    · Treasuries: 10s and 30s are both weakening from their highs of the morning but both remain in the green (yields lower) ahead of today’s 30s yr auction. color from the desk on the recent Treasury strength: The “wall of cash” story continues to play out as we real $ buying the back end of the curve and demand for high quality spread product remains quite robust. I’ve been asked quite a few questions as to why real $ is chasing the mkt higher right now…I think it’s less about mkt level at this point and more about cont’d inflows into fixed income funds…asset managers, at this point at least, need to buy the mkt just to maintain their level of investment relative to their bogey. As long as the cash inflows continue, it will be difficult for the market to retrace in a meaningful way/the back end of the curve to cheapen significantly.

  131. 131
    VTZ Says:

    RE 129: One more rally would likely correspond to a newer low on the dollar. Dollar needs to break 75.82 on the downside for the move to continue.

  132. 132
    baylor3217 Says:

    Sold 80% of my WLL position up 15%. Booked it and feel good about it. Moving on. Opportunity cost be damned. (this is part of my self help therapy)

  133. 133
    1520sbroad Says:

    #132 – i did same thing with a set of EOG Oct 90’s today. Nothing wrong with playing with house money.

    cheers to BOP for whatever dance was performed earlier – seemed to help EOG.

  134. 134
    VTZ Says:


    865M$ for carbon sequestration from the governments.

  135. 135
    VTZ Says:

    Project designed to offset 60% of the combined Base and Expansion 1 (2010 startup) CO2 emissions.

  136. 136
    BirdsofpreyRcool Says:

    1520s — I believe it was z, who suggested that I might be doing this famous New Braunfels Octoberfest Chicken Dance this morning.

    What you have to appreciate, is that one must down several steins of beer over a fairly short period of time, in order to truly do this dance with any sense of flair… However, as fond as I am of partying, it is a fallacy that I pour beer on my corn flakes for breakfast.

    All that said, for your enjoyment…here’s The (infamous) Chicken Dance.

  137. 137
    Jerome Blank Says:

    HK not giving up…pressing against that daily trendline trying to get back into X’s on a print of $25

  138. 138
    zman Says:

    Still eying that SP chart. In my experience, names like HK that are pushing levels like that will improve to new highs with small bounces in the index. So, as long as crude and NG don’t fall out of bed in the next 3 minutes, the stock should improve with smallish up moves in the market. I don’t sense a big intra day reversal in the broad market but instead a close near the HOD.

    We have Industrial production before the bell in the morning which can be a bugger for the market so I may take more profits into an end of day rally. IP may lag estimates as we have seen several indications that September was softer than analysts had expected. We also get sentiment after the open.

  139. 139
    zman Says:

    Henri now a TD, not a TS


    Rough territory for storms ahead.

  140. 140
    zman Says:

    Good, green but not too green closes on oil and natural gas. Stocks more free to trade with the market. Every once in awhile I make a statement about not being so short term oriented but I am in the process of liquidating the October positions (6 days left after today) and am watching charts and relative valuations a bit more than normal.

  141. 141
    RMD Says:

    BOP: in #136 is one of those obviously experienced dancers YOU? Impressive.

  142. 142
    BirdsofpreyRcool Says:

    RMD — no… sadly. I was cut in Vegas. Didn’t make the Top 20. Too many professional Chicken Dancers out there, I’m sorry to say!

  143. 143
    Jerome Blank Says:

    SD is currently battling the underside resistance on the daily upsloping trendline which it breaks above right at the $14 call level

  144. 144
    zman Says:

    Thanks Jerome – probably going to take losses in the Octobers there tomorrow and will definitely reload with Novembers or Decembers for their KRU purchase details call sometime in the first 10 days of November.

  145. 145
    BirdsofpreyRcool Says:

    A Must-Read article posted on Tues. A bit late (as it refers to a mrkt sell-off), but talks about the credit cycle and how it will likely unfold for the next 4-5 yrs. So, a few days late shouldn’t hurt.


  146. 146
    Jerome Blank Says:

    I’m holding an options position with you here, with at least a week left, might have a shot at breaking $14, if mkt holds up… it is on a buy signal, going back into a col of x’s today, just for discussion, you think it better to cover to recoup some premium rather than go for an in the money possibility?

  147. 147
    zman Says:

    HK printing $25s. I may pitch my $26 Octobers overboard.

  148. 148
    zman Says:

    Disregard 138. That’s next week’s calendar for industrial production. Tomorrow just trade balance. Close near HOD probably means a bounce on the open unless Ben squawks on us tonight.

  149. 149
    Wyoming Says:


  150. 150
    zman Says:

    re 149 – can’t disagree with the guy on demand stabilizing, stocks being high.

    moving in the right direction product stocks last few months? Um, wrong.

    What am I listening for Wyo?

  151. 151
    zman Says:

    Re 149 – growth in demand coming from China. Yep. Not the developed countries.

  152. 152
    Wyoming Says:

    Just info, things I post do not necessarily mean I agree or disagree with the comments.

  153. 153
    Jerome Blank Says:

    Hi Zman, any thoughts on SD RE: #146 above…I don’t trade options that frequently, usually stock only, so any further insight would be appreciated…

  154. 154
    zman Says:

    On a call, back in a few

  155. 155
    zman Says:

    Re SD – in the near term, I think they scooped up KRU (if the deal closes) for low $. It gives them an expanded opportunity set. Management is good, former CHK co founder, but the story has been tightly focused on the WTO gas play. This acquisition gives them access to more drilling locations and potentially, makes them a small Bakken player that might, just might, have Bakken and TFS acreage that could better be exploited by them. I have a feeling they will put on a good pitch when they can talk more about the deal in early November. The stock is leveraged pretty heavily but that’s much less of an issue now with unfrozen credit markets, they are well hedged for 2010 at very nice gas prices ($7.70). I think the Street will like the idea of the acquisition’s potentially oily upside.

  156. 156
    zman Says:

    Kyle – Re WFT – I missed the story about Mexico slowing in Chicontepec, this is set to be the big replacement for the steeply declining Cantarel. I had seen before where Pemex had said things were not working as they liked there so far a couple of weeks back.

  157. 157
    zman Says:

    No more trades for me today. Declaring beerthirty with five minutes left to the close.

  158. 158
    BirdsofpreyRcool Says:

    Wow. Crowd went wilder than I thought it would.

  159. 159
    BirdsofpreyRcool Says:

    z — just curious… you price the 10KP yet? Or, do we have to wait to tomorrow.

  160. 160
    RMD Says:

    Z where did you list the co.s wich are offshore GOM focused; I’m looking for comparables to MCF?

  161. 161
    zman Says:

    BOP – 10KP II = $29,700, 58% cash


  162. 162
    bill Says:

    i was selling/taking profits today..

    my be nice strategy when everone wants stocks be nice and sell them

    when everyone wants to dump be nice and buy them

    hk languished for weeks at 22 now everyone wants it at 25

    atpg was in the 15’s a few days ago, today pushing 20

    i sold some sd too early (yesterday at 13)

    now i hope the market doesnt runa way from me

  163. 163
    bill Says:

    i got a virus on my pc

    security tool, i get the blue screen and cant access my excell files

    is there any easy way to destroy this

  164. 164
    zman Says:

    EEE – on the tape with a listing issue. Can you say reverse split on the way.

  165. 165
    zman Says:

    Bill – that stinks. Norton antivirus maybe?

  166. 166
    BirdsofpreyRcool Says:

    #161… so, that’s up almost 77% in ONE DAY. Is that about the largest one day move for the portfolio?? Especially, as you started the way with 24% cash. Wow.

  167. 167
    BirdsofpreyRcool Says:

    CVX out with operational update. Nutshell — upstream good… downstream, not so good.

  168. 168
    zman Says:

    re 166. We’ve had bigger % moves in a day when the portfolio was smaller (not the $10KP II I don’t think but previous portfolios) and bigger dollar moves in Summer 2008 before energy tanked. Frankly, that’s a bit more volatility than I care for. But yeah, it was a good day.

  169. 169
    BirdsofpreyRcool Says:

    i hear ya. Volatility on the upside is fun. Unfortunately, it cuts both ways. But, that’s why God created puts, you know.

  170. 170
    zman Says:

    re 169 – I credit the Dutch for the modern equivalent of options (Amsterdam in the 1600s) but there is some debate that it goes back a lot further.

  171. 171
    zman Says:

    BWP on the tape saying Fayetteville and Greenville laterals receive approval to operate at standard operating pressure. All pipe anomalies have been remediated.

  172. 172
    zman Says:

    Bernanke – will tighten when outlook improves. Duh.


  173. 173
    RMD Says:

    Thanks for 161

  174. 174
    zman Says:

    $10KP II spreadsheet tab and current holdings tab updated.

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