14
Jan

Wrap – Week Ended 01/13/12 (In Progress)

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29 Responses to “Wrap – Week Ended 01/13/12 (In Progress)”

  1. 1
    zman Says:

    Just an FYI for all you quarterly tax filers … Wednesday is the day for Q411 estimated taxes.

  2. 2
    Wrap – Week Ended 01/13/12 (In Progress) | Your Blog Says:

    […] TBA Zman’s Energy Brain ~ oil, gas, stocks, etc… This entry was posted in General and tagged 01/13/12, Ended, Progress, Week, Wrap by admin. […]

  3. 3
    brodway Says:

    in this very volatile environment where any news can move equities up or down in a jiffy, i wanted to start off 2012 by reflecting on some of the things i may have done better in 2011 with hopes of making better trades in 2012.

    one thing i realized is that no matter how smart or educated one may have been in 2011, there were moments that no one could have foreseen. avoiding a collapse at mid year after many have boarded the comeback bandwagon was almost impossible to predict unless you were closely following charts and were able to get out at almost the perfect moment. the moves were so fast and furious that by the time one realized that they were on the wrong side of the trade and wanted to get out it was too late as the holding was down 20% in a heartbeat.

    i have to say i’m fortunate to have been stuck in oil for most of the year after moving most of my assets into oil and gas at the mid year mark. after getting beat up in tech earlier when i was almost sure that it was my ticket to retirement in the first quarter of 2011, i was fotunate to find the Zman site and started to transition away from tech.

    this week once again confirms that the volatility is here to stay. before one could even figure out why their energy holding was down significantly it made no sense to sell it as the valuation became compelling. this may be the theme for 2012 once again.

    the only thing that does make sense to me is that oil and gas are here to stay. onbce again, i believe that in 2012 there will be continuing consolidation in the sector and it will outperform most other sectors.

    although short term charts are much too difficult to decipher for me (Zorg sure does a good job at making some great cals), the longer term charts are much easier to read and understand. i was looking at many 5 year charts and found one consistent theme. since the great collapse in 2009, we have been building slow but meaningful chart formations in many equities. certainly there have been some absolutely vicious moves in between, but the charts slowly are building higher highs and higher lows at much greater time periods.

    i remember a few weeks ago when ROSE took a sudden drop it was not easy trying to pick a bottom. the one thing that did make sense to me however, was looking at the long term chart and establish at least a basis for some support. the long term chart did show that 40 was meaningful support area for the stock and i had documented a mental trade (did not actually purchase any) where i was going to enter in the $41 range. so far this had worked.

    i spent a few hours this morning going over similar chart study in REXX and have come to the conclusion that the $10 support area is just too obvious on the long term chart too avoid a trade in if it gets there. i think Zman also mentioned that he would be a buyer in the high 10’s (not sure if for the same reason).

    uless there are some serious issues with the company itself the chart says $10 should hold a support it has pretty much when it got there in October of 2010.

    my point is that many wild and unimaginable things have happened and may continue to happen. the long term charts however tell me we have entered a long term bull market when we crashed in 2009. although the speed of those moves are much slower than one would anticipate in a normal environment, among all the mad and unexplainable behavior there seems to be one thing that works. longer term support levels are holding and the next move up is higher even if that move may come 6 months or a year out.

    i hope everyone has a profitable year. good luck. and thanks for the great forum.

  4. 4
    crysball Says:

    NY Times article on Frac’ing….and the new focus on consummption of Water in Frac’ing

    http://www.nytimes.com/2012/01/15/us/new-texas-rule-to-unlock-secrets-of-hydraulic-fracturing.html?hp

  5. 5
    brodway Says:

    CHK looks to have very strong long term support at 20. has been retested this level many times in the last 2 years and has held above since summer of 2009.

    also interesting article on partially owned CHK company possibly going public in 2012

    FTS International Inc., a hydraulic fracturing company partly owned by Chesapeake Energy Corp. (CHK), sees a shortage continuing through the year for railcars needed to haul fracking sand to wells.

    “Railcars are in very high demand,” Kevin McGlinch, senior vice president of FTS International, said in an interview today at its Fort Worth, Texas headquarters. The cars are used for moving grain and “also, within the energy space, there’s us and lots of other people trying to get these same cars at the same time.”

    Railcar orders more than doubled to 20,165 in the third quarter of 2011 from a year earlier, according to data from the Railway Supply Institute. The order backlog for U.S. freight cars more than tripled to 65,044 in the same period.

    Increased fracking to get access to U.S. oil and natural gas has fueled demand for the sand, injected underground in the process along with water and chemicals. The industry will boost its consumption of sand and other proppants 20 percent this year to as much as 100 billion pounds (45 million kilograms), Brian Uhlmer, an analyst at Global Hunter Securities LLC in Houston, estimated in a Sept. 23 note to investors.

    Fracking an average well in Pennsylvania’s Marcellus Shale region uses about 7 million pounds of sand — more than enough to cover a U.S. football field a foot deep, according to FTS estimates.

    About 35 railcars of sand are needed for each well in the Marcellus, McGlinch said. FTS, which mines its own sand, is seeking to increase its railcar count by 700, or 28 percent, to 3,200, he said.

    Quick Delivery
    “That’s the number we think will allow us to move our sand efficiently,” he said. “We actually have the orders in. It’s just a matter of how quickly they can make them and deliver them.”

    The company is leasing an average of 50 new cars a month at $500 to $700 each, McGlinch said.

    “Compared to when there wasn’t as much activity as there is today, we were paying less money,” McGlinch said.

    Getting a railcar depends on companies such as FTS getting a slot on the manufacturing line, said Lee Klaskow, senior analyst at Bloomberg Industries in Princeton, N.J.

    “There’s a handful of manufacturers,” he said. “They plan how much they’re going to manufacture. You have to make sure you get your order in to get those slots that are available.”

    FTS International, formerly known as Frac Tech Services LLC, is planning an initial public offering this year. The company is still seeking joint-venture deals with companies in Saudi Arabia, China, Brazil and Argentina, among others, McGlinch said.

  6. 6
    elduque Says:

    Thanks Broadway. Portfolio doesn’t look particularly pretty. However, I am able to sleep nights, by owing stuff stocks: gold, oil and gas and fertilizer stocks. All are highly volatile and at times I wonder why they are trading so cheap to net asset value and price to cash flow.

  7. 7
    brodway Says:

    Elduque. I concur on materials in general being cheap on a long term basis. Besides the contiuned theme of world population growth (there are predictions that world population will reach 9 billion by 2040), and a real concern over food and water shortages, there is also a pent up demand for many materials such as steel and aluminum that we haven’t talked about in a few years. Things such as new cars, new homes and home renovations have to be on the radar of many people and i’m of the opinion there is some pent up demand out there that will start to come into fruition in the next year or two.

    I came across this interesting article today which made me pause and rethink that maybe i is time to start looking at steel (NUE)and aluminum (CENX)

    http://www.bizjournals.com/dayton/news/2012/01/14/poll-one-in-three-plan-to-buy-new-car.html?ana=yfcpc

    Looking out 5 years, i’m looking for fertilizer companies to really start to hit on ally cylinders as there will be much talk about the world food supply (MOS, POT, AGU). Similarly, those companies that are able to provide water solutions, which i believe is a natural resource little spoken about, will start to do well. Not sure i want to get into this yet but (VE) looks cheap once the markets in Europe begin to settle down.

  8. 8
    tomdavis12 Says:

    Brodway: A manu. of railcars is Trinity Indus – TRN. Stock not cheap. Has a wind turbine unit which has struggled of late. Was upgraded by S&P 10/26/11. I don’t have any detailed info about company. Maybe you should put on your radar.

  9. 9
    brodway Says:

    ZMAN…

    SM getting close to the 60’s again where it seems to have found some pretty solid support. it has been on my radar for entry since you first mentioned it, but have not pulled the trigger as i’ve not been comfortable with the price level. maybe this time around i may get a few shares.

  10. 10
    crysball Says:

    Nigeria does a partial rollback on gasoline prices in exchange for labor peace(however temporary that may be):

    http://www.nytimes.com/2012/01/17/world/africa/nigerian-president-rolls-back-price-of-gasoline.html?hp

  11. 11
    zman Says:

    Happy MLK day, out the this morning supporting the local economy with the interns, back later.

    Re Nigeria, the proposed cuts are too small to please the unions, not nearly back to the old levels. Sunday the unions had said they would start shutting in oil production, have not seen any stories yet on any impact yet.

  12. 12
    skimo Says:

    If the latest seeking alpha writer on LINE had been a Z subscriber, he could have written his article (well, most of it) 3 or 4 years ago when Z identified LINE’s salient characteristics. 🙂

  13. 13
    reefguy Says:

    1: Why lead with bad news…lol

  14. 14
    zman Says:

    Re 12 – Thanks. Going to be long again there early this coming week.

    Reef – ha, it’s a problem to have 😉

    Off to the children’s discovery museum, going to propose a fraccing demo to one of their board members.

  15. 15
    reefguy Says:

    z..explain that to my wife…

  16. 16
    zman Says:

    re 15 – adding that to the list of things beyond my abilities.

  17. 17
    crysball Says:

    HORIZONTAL EARTHQUAKES
    First confirmed Horizizontal earhquake:

    http://news.yahoo.com/rare-caterpillar-horizontal-earthquake-discovered-154504065.html

    Can see the ‘treehuggers’ grabbing on to this as an arguement for controlling fracing …….even though depth and pressure of planar formations such as Marcellus, Utica, Bakken, etc. would not tend to support such an arguement.

    Any seismologists among the Zman subscribers care to comment?

  18. 18
    zman Says:

    Wind River on the tape with a reserves potential report, also highlights the reasons why Phat City #1 failed (water). Will have some comments in the morning post.

    http://windriverenergy.com/_resources/news/nr_2012_01_16.pdf

  19. 19
    zman Says:

    DR Link – congrats on winning Contest 1 – VQ successfully goes private.

  20. 20
    Zorgnak Says:

    Iran oil embargo study..

    http://www.econbrowser.com/archives/2012/01/iranian_oil_emb.html

  21. 21
    zman Says:

    MLP thoughts in tomorrow’s post. Look for a yield name or two to be added to the portfolio this week as we take some profits in some trading positions taken last Summer and Fall.

    MMR CC at 10 am EST tomorrow.

  22. 22
    zman Says:

    Thanks Zorg, Iran said today it would punish other OPEC members should they act to raise production volumes to offset any embargo of its own production.

  23. 23
    Zorgnak Says:

    BTU price piece by Gregor

    http://gregor.us/

  24. 24
    zman Says:

    re 23 – its been blown out for a long time. Crude is global, gas is local and chemistry is a lot less important than global economics and gas is way, way, way oversupplied.

  25. 25
    zman Says:

    China 4Q GDP 8.9% vs 8.7% forecast.

  26. 26
    zman Says:

    Crude running on China

    http://www.cx-portal.com/wti/oil_en.html

  27. 27
    zman Says:

    … and S&P futures running on China as well, up 12 now with DJIA up 110+.

  28. 28
    zman Says:

    The Tuesday post is up

  29. 29
    windows 7 enterprise Says:

    windows 7 enterprise…

    […]Zman’s Energy Brain ~ oil, gas, stocks, etc… » Blog Archive » Wrap – Week Ended 01/13/12 (In Progress)[…]…

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