We took yesterday to make a few trades and set the portfolio up for the long-term in some cases. It was a brutal day, and got really bad right after the Fed released their minutes. It appears that they are very conflicted with how to proceed and how much help the economy may or may not need to move forward. Our guess is that QE3 is on the table until it is obvious that it is no longer needed. Europe is not yet fixed, no matter what anyone thinks and if that creeps back to the front pages of the newspapers - as we think likely - then it will take some serious firepower to quash that issue as Spain is much larger than Greece.
SandRidge Energy (SD) was up yesterday, one of only a handful of companies actually doing that on our watch lists. We took the opportunity to sell our position we had purchased the day before on a hunch and got out for a small profit. The shares closed higher than where we sold, but after the Fed minutes it looks like our sell was the right thing to do. Taking profits is never the wrong thing to do, ever. We will look at getting back in at a later date, however for now we are content to sit on some cash and not tie up capital.
Kodiak Oil & Gas (KOG) has held in strongly around the $10/share level. If you remember that was our pick for where to place our stops, which came into play not long ago. We continue to watch this, and depending on the results out of the Utica might find that the Bakken is the most prolific area for oil and the higher margin NGLs, which would make Kodiak that much more attractive. It is one we are still watching, and like SandRidge will find ourselves investing in once again.
Alpha Natural Resources (ANR) took a beating yesterday. The stock was down $0.78 (5.04%) to close at $14.69/share. Coal stocks have been hit with the recent EPA ruling and more importantly with natural gas prices falling to decade lows. The competition is looking tough in the short-term, but the good news is that the market is factoring in for higher natural gas prices down the road according to the futures, thus coal long-term appears to be decent speculation. One must also remember that coal is a commodity which has a world market and is transported daily over established infrastructure without any problems. We continue to watch these coal stocks and may initiate a long-term trade here as we see the economics only getting better not worse long-term.
Arch Coal (ACI) is another one we mentioned previously and are also watching. It too is near a 52-week low and has been punished by the market based on the short-term trends within the power generating industry. This one is yielding 4%+, so that is a positive as well.
Molycorp (MCP) has been putting together an impressive run and the financial news media is picking up on what is happening. The Pentagon said yesterday that they think that defense needs for rare earths will be met (story here) which is good news for the defense industry and America's national defense. However we think it puts a lot of faith into the fact that new rare earth production will come online soon without a hitch - never a guarantee in the mining world, especially when dealing with something this complex. It shall be interesting to watch.