Commodities seem to be taking a breather, except for the excitement in the oil arena last night during electronic after-hours trading. Rumor had it that a Saudi pipeline had exploded, and since this was first reported by Iranian news agencies, the conclusion was reached that they must have been the culprits. Prices rose by $6/barrel rather quickly, only to give up half of their gains as the real story came out - that being that there was no news.
We see Asia is up strong this morning, and Europe less so, but up is up and we will take green arrows over red any morning.
Our readers and clients were not stopped out of their holdings in Kodiak Oil and Gas (NYSE:KOG) which is a good thing as the shares ended up rallying through the day. We will leave the stop on through today's close and revisit later based on market conditions. We feel we need to watch this one until forward momentum is once again firmly established, at which time we can safely let our money ride. Gulfport Energy (NASDAQ:GPOR) has been hit rather hard as of late, and we find ourselves purchasers on the big down days going forward from these levels. The company has been one of our big winners, and when winning one should sit back and enjoy and cut losses elsewhere.
Natural gas stockpiles fell last week, but we hardly take notice to this news. Yes one can trade on this, but our trading is more focused on long-term trends with intermediate trades rather than the day-to-day trades natural gas requires. This is why we find ourselves liking the oily and natural gas liquids plays over the pure dry gas plays out there. Chesapeake Energy (NYSE:CHK) seems to be the proxy, and due to the change in their production mix in the coming years, we too can get behind them.
Cameco (NYSE:CCJ) is buying out Areva in the Millenium Deposit, which probably indicates they will not be buying out any juniors in the near future. The company probably got a pretty good price simply because Areva is in need of retiring debt they took on to take over Uramin back during the uranium bull. That was an acquisition we thought was quite rich at the time, and it has proven so. It has cost Areva dearly, and now it may be costing them their future as one of the top manufacturers of nuclear reactors and suppliers of uranium.
Gold and Silver
Both are trading flat in relation to their prices yesterday. The silver lining here, and no pun was intended there, is that silver is holding above the $35/ounce level. That makes us comfortable, and further positive economic news should only propel the precious/industrial metal higher. Gold seems unable to take out and hold the $1720/ounce level, but we expect traders to be a bit more hesitant after the craziness of trading two days ago. Rarely does one see drops like that, and it was due to a few rather large trades. Someone got spooked, and others probably got margin calls. We are not leveraged on our trade, and simply own both gold and silver in physical terms - and substantially more silver than gold.
Rare earths saw a nice bounce across the board yesterday. As we discussed yesterday we were watching Molycorp (MCP) to see if it could regain its footing above the $25/share territory. It did, but marginally so. This is something to watch, and although the stock is down significantly from the $70/share level, it is still nearly 100% above its IPO price. We think that with the technology sector of the economy still picking up and showing no signs of letting up, that rare earths may again come into play. A new news cycle may also help propel these stocks back into a mini bull market, but until then we will play the group based off of who has the best chances of production and news events upcoming.
Disclosure: I am long GPOR.