Tuesday's Commodity News To Trade On

by: Matthew Smith

Commodities were higher yesterday, and oil was moving higher and leading the way. There is news out that China's appetite for iron ore is starting to level off, which is something we expected due to the expected lower growth out of China. Also leading the markets to believe that China's building boom is slowing is the news that copper stockpiles are rising there, which helped push prices down.


Today we want to point out that we are looking at Whiting Petroleum (NYSE:WLL) and think that it has solid fundamentals behind it. The company has a low P/E, great earnings and is focused on oil. Further the company is trading off of its 52-week high, trading in a middle area between the high and low for the year. They continue to do as the rest of the industry has and create trusts to drop assets down into in order to continue their own drilling plans. They recently announced units offered for Whiting USA Trust II, with proceeds to be used to pay down debt.

Kodiak Oil & Gas (NYSE:KOG) was up yesterday on oil moving higher and the industry as a whole being up. We think that the company is well positioned to benefit from the infrastructure buildout in the Bakken area and think that they can fix the issues they faced last quarter. We would recommend putting in a stop at $10/share today, as that is far enough down we feel it will not be triggered. This move is not to be confused with being bearish on the stock, it should be seen as an insurance policy against gains, and nothing more and nothing less.

Natural Gas

Chesapeake (NYSE:CHK) finished higher yesterday and was an issue that caught our eye. For as much slack as the stock gets due to supposed funding issues and inability to pay bills going forward it hit us that the stock was on our dividend list. This is something which we had forgotten, and felt that maybe it would be wise to point it out to our readers. We have covered it here and discussed that you get paid to hold it, and at 1.4% it is not that far behind some of the big oil companies at this point.

Gold & Silver

Gold moved higher yesterday, fell short of $1670/ounce and now finds itself just below the $1650/ounce level. The bears and bulls are fighting for direction here, and so far it appears that the bears are piling up victory after victory on the bulls.

The same can be said for silver, which tested the $33/ounce level, surpassed it, yet finds itself at the same level today as it was at this time yesterday. It is like groundhog day in the precious metals markets and it will take strong economic news this week to break it out of this funk.

Rare Earths

Shares in Molycorp (MCP) were up for the day, but sold off from the midpoint of the day to the close to finish below $30/share. Still a good performance, and we are looking to the company to provide some leadership for what we think is the next leg up in the rare earths bull market. We still think that Rare Element Resources (NYSEMKT:REE) might be the best way to play this coming rise and are happy that we were able to recently recommend to readers to get in at lower prices. It is obviously better to have bought shares in the $5s than at current prices, but either way if we are correct both will look like good entry points down the road.

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