Commodities had a strong day yesterday, and the week is not looking all that bad at this point. If the U.S. market can follow Europe higher, then it will look that much better. We are not anticipating doing any trades today as we will be in and out of the office. That takes out the options to trade and with the elections so close we would not want to get caught in a market pushed down by some well placed rumors by unscrupulous sources. We will hold our positions we currently have and that exposure shall suit us going into the weekend. We are comfortable with that level of risk both to the upside and downside, so we are content.
Oil & Natural Gas
Both Chesapeake Energy (CHK) and SandRidge Energy (SD) put in pretty solid days yesterday as we saw our oil and natural gas plays rally yesterday. Chesapeake was up $0.40 (2.36%) to close at $17.33/share on volume of 22.8 million. The volume is reverting to the norm here and that is a good thing as it indicates that the company is becoming less of a target and/or focus of the news cycle. Hopefully the company has turned a corner and we have seen the lows, and if it could give investors some clarity like SandRidge has it would be a $30/share stock.
SandRidge was strong all day, rising $0.28 (4.68%) to close at $6.26/share on volume of 12.7 million shares. Yesterday the company did not need the central bank rumors to help it finish higher, as it was up strongly all day, but the rumors did help ensure a strong finish which has been an issue with commodity stocks as of late.
We did see a big mover after hours as GMX Resources (GMXR) released new information on recently completed wells in the Bakken play. The company closed at $0.80/share in regular trading, but was up 20% after hours on the revelation that they had successful wells with respectable flows. The company had two wells, one with a working interest of 55% and the other 17%, return peak flow rates of 1.479 and 1,170 boepd respectively. We also now know that the company expects oil production in the 2nd quarter to be in the range of 60,000-65,000 boe.
Patriot Coal (PCX) was down another 4% yesterday as shares closed down $0.05 to close at $1.19/share. Volume is still coming in high, yesterday having come in at 13.2 million shares which indicates that there is some day trading taking place here and intense speculation in the industry as nearly all issues in the sector are trading at a faster clip comparably with the rest of the market. Investors saw a big move around 11AM, but then the shares sold off the rest of the day which really should not have surprised anyone. The stock is in the dog house with investors as it has been down in up markets, both generally speaking and when one looks at commodity stocks specifically.
Freeport-McMoRan (FCX) rose $0.55 (1.65%) to close at $33.90/share. Volume was lighter than the three month average, but it was still a respectable 13 million shares. Although up is up and we use that to jokingly make our point from time to time that it is never a bad thing to be green, we do need to point out that the stock tried three times to break $34/share and failed. It did break the $34/share level in after hours, but that is not something we trust as it is easy and cheap to game and push a stock around when the big market participants have called it a day. As we have stated previously, if central bankers are going to get involved with the world economy, this one will fly but investors need to keep in mind all of the potential landmines we have pointed out over the past few months.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.