With U.S. futures actually lower this morning and European shares still green and having bounced off of their lows, but still well below their early highs we are left to believe that commodities will move modestly. If there was truly an answer to the European issues then we would see commodities rally significantly. That rally is not today, and is delayed until we can get more answers to the other questions plaguing the continent. The one thing to take away from this weekend's election in Greece is that the European people are willing to do what is right in order to fix this situation and for that does give us hope that there will be some sort of resolution in the future.
Oil & Natural Gas
ATP Oil & Gas (ATPG) had an impressive day Friday, rising $1.20 (29.78%) to close at $5.23/share on volume of 12.8 million shares. The company rose to a high of $6.16/share during trading until the close where shares saw a sell-off right at the end. The rest of the day had a very strong looking chart. The excitement was over the company announcing that they had filed suit against the U.S. government over the handling of the shutdown of drilling in the Gulf of Mexico via the moratorium and then the lack of approvals once the drilling was supposedly opened up again, which cost the company money via the interest on the working capital they had to raise. The suit has been filed and it will be interesting how this one plays out, we will continue to watch it as it may have ramifications for other companies we are following.
Chesapeake Energy (CHK) is not one of those companies, but we are very interested in the recent price action and figure to initiate a position on a pullback. Shares were strong again Friday rising $0.77 (4.44%) to close at $18.10/share on volume of 23.4 million. The volatility on this one has come down, and so too has the volume. We like predictability and so too does the market, and this drop in volatility is to our liking. Investors should be reminded to look out for property sales in the Permian and Utica plays and a joint venture in the Mississippian play. There should be some other minor deals, but these will be the important ones to watch.
Patriot Coal (PCX) ended its losing streak on Friday with shares rising $0.06 (5.04%) to close at $1.25/share on volume of 18.8 million shares. We are still not interested in this or the other coal plays and think that we are probably due for a dead cat bounce as they say, but the trend is our friend and lower highs and lower lows seem to be in order. It is our belief that Patriot Coal will go below the $1 handle and this is why we will not be playing any trades here - the risk of getting caught and then trapped in is just too great. There is never a reason to play for 5% upside with 25% downside staring you in the eyes. Thus our reluctance to trade in and out of this stock.
Vale (VALE) continues to show us strength. Shares on Friday rose $0.62 (3.03%) to close at $19.41/share with volume coming in at 22.2 million shares. The chart looked quite positive on Friday, but we are still skeptical about this one moving forward. The dividend has really held this one together, but China and Europe could very well drop this one lower with bad news in the next few weeks. This is a time when we are simply happy to not have a position on either side of the trade. We do look forward to being long of Vale shares prior to a turnaround in the commodity markets as it will be one of the better performers among the larger market capitalization stocks.
Kinross Gold Corp (KGC) gave investors a lot to talk about on Friday as rumors were running rampant that the company has hired financial advisors to shop the firm around and look for strategic options. Shares rose $0.16 (1.84%) to close at $8.86/share on volume of 28.5 million shares. The volume was almost three times its three month average. Many times nothing arises out of situations where advisors are hired and this was after all just a rumor. We would not initiate a position based off of this, but we will add this to our watch lists in order to keep an eye on the situation.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.