Monday's Commodity News To Trade On

 |  Includes: CHK, KOG, MCPIQ, REE, SD
by: Matthew Smith

Commodities should have plenty of news this week to trade on. The housing data coming out this week should only be the beginning, but it will be important due to it being one of the weaker areas of the economy. Any turn around there and we could see inflation and growth numbers move upwards.


Sandridge Energy (NYSE:SD) had a good day Friday and continues its move upwards. The news today is that fracking crews are being moved from the natural gas (dry) shale plays and into the far more economical oil shale plays. This is going to drive down drilling costs for those in the oil plays and should only make Sandridge that much better when looking at comparables in drilling costs.

Kodiak Oil & Gas (NYSE:KOG) rallied at the end of the day on Friday, strongly. We did not put any stops on the shares like we had speculated we might, but it is still under consideration. Tuesday will probably be a better day to decide that than today - as economic news is going to decide this for us most likely.

Natural Gas

Chesapeake (NYSE:CHK) should also benefit from drilling crews moving into the oil plays and out of the natural gas areas moving forward. This could be a catalyst in slowing the downtrend in natural gas prices here in North America as moving this equipment takes time and is a medium to long-term decision. We see natural gas proven reserves growing at a slower rate going forward, and that is economics at work in real life. Lower prices lead to lower production and we figure that the only "new" growth in natural gas will come from those areas also able to produce oil.

Gold & Silver

There is not too much to say about the precious metals markets right now, other than the fact that they have been down. We are looking to purchase trading positions here, and will most likely focus on silver here to do so.

Rare Earths

Molycorp (MCP) is hanging in the high 20s, but has fallen below the $30/share level. We think that the industry is seriously beaten down and may be worth a look for some trading capital to be put to work here for the short-term. Many of the companies have been beaten down, and could easily rally 100% on some news. It is one of the last sectors not having rallied significantly in the latest rally. Rare Element Resources (NYSEMKT:REE) is a more leveraged name than Molycorp, and day traders love it so it may be the best way to play a rally should one materialize.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.