Wrap – Week Ended 2/5/10

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Wrap Comments

• Not As Bad As It Felt. At least as far as the indexes go if you had asked me to guess the damage last week I would have said the percentage hits would have been worse than they actually were. Down 1% on the big indexes? Down 2% on the energy ones? Seemed a lot worse than that but when you consider that Monday and Tuesday were up days and for all practical purposes, Friday's reversal led to a flat to slightly up day, well, the week may have just been a higher bottom in the bull as we failed to take out the October 2009 low. I'm aware of all the chartists out there calling for further weakness (many of whom were bullish until the charts weakened) and I'm also aware of the cause of this dip and the fact that it's not as dipworthy as it has gotten credit for. Buyers came back into the market late Friday which is interesting and not just for equities but for the so called risk assets such as crude which lifted mightily in after hours trading. If Monday opens positively (big if I know) then I see another shot at 1,100 on the S&P, with the same sort of post Dubai "what were we all so worried about" head scratching that we saw last fall.
  

• Natural Gas Rallied On A Colder Forecast. When you dump 2 feet of anything on Washington D.C. it's probably good for something. When that 2 feet of something comes in the form of snow, it's good for natural gas (yes you can argue that it hurts industrial demand but nowhere near as much as it helps the residential side of the equation). I continue to view natural gas as range bound in the $5 to $6 range as withdrawals come up against increasingly easy comparisons and gas storage resumes a more downward track towards a 1.5 Tcf seasonal trough. Next week we'll have a hedge update for the gassy stocks we commonly traffic in.
  

• Next Two Weeks We'll Have More For The Catalyst List As Earnings Roll Out. Earnings for the E&Ps will continue to trickle out over the next couple of weeks before the real deluge hits. We should have more Bakken and Granite Wash news during this period and perhaps news from our ultra-deep shelf Gulf of Mexico plays which can put a little fire under the stocks, especially in light of the recent weakness.