US futures are higher this morning, and so too was Asia and Europe. The gains are marginal, but up is up. Commodity markets can look forward to the crude inventories as those numbers always have the potential to move the oil and natural gas markets. Natural gas has been performing well, and it is one of the standouts in this market as it took its beating a few months ago and has been recovering ever since then. We are still building cash right now, and waiting for a pullback to previous levels before we make our move for either a trade or long-term investment, but we feel we are getting close to an interim bottom with a pop coming up.
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Oil & Natural Gas
ATP Oil & Gas (ATPG) had a rough day yesterday, but other than the day when it rose significantly on the news that the company was filing suit against the government for their actions in regulating drilling in the waters of the Gulf of Mexico. Shares closed at $2.95/share after falling $0.46 (13.49%) on volume of 5.6 million shares to continue the trend lower. One bit of good news for investors recently was that the company increased its liquidity, but there is not a whole lot of good news for investors to latch onto.
Investors saw more good news for the potash producers such as Potash Corp of Saskatchewan (POT) and Mosaic (MOS) as shares rallied in conjunction with corn prices heading higher. There is some fear about the corn crop and what will or will not be damaged. Corn even traded limit up on Monday, so this is something to pay attention to as we could see shares move higher by 5-10% should crop prices get stronger. Potash Corp saw its volume increase dramatically to 9.6 million shares while rising $1.49 (3.67%) to close at $42.50/share). Mosaic traded higher by $2.21 (4.32%) to close at $53.31/share on volume of 9 million shares. These companies have been beaten up badly, and have even made us look bad this year, so we could see a nice little rally as people are forced to rotate back into them. Investors need to keep an eye out for the corn crop and other heavy potash consuming crops for an indication of where prices are heading.
With the news we had out yesterday regarding the housing numbers and American consumer we were a bit surprised that Freeport-McMoRan (FCX) was as weak as it was. We never look down on a stock that finishes a day higher, but our thought was that this should have been much higher with investors looking at a potential increase in copper demand. Volume came in at 14.6 million shares while rising $0.01 (0.03%) to close at $31.61/share. We are really liking our chances of maybe landing some of these shares around the $30/share level as we talked about a few months back. That is what we are watching for, and we may just get it with Europe having a big meeting and potential for news this week.
Vale (VALE) had volume of 14.6 million shares as investors bid the price up by $0.44 (2.35%) to close at $19.14/share. On Monday the company closed the sale of its Colombian coal assets to the Goldman Sachs led group in a deal that was announced about a month ago. One good sign with the company is that shares came alive to rise into the close yesterday but we are torn with where to enter this one. The yield is more than adequate, but the economic outlook is foggy at best and we are hesitant to enter a play which has such a high dependence on what happens in China. We will continue to monitor the situation, but think that we need to be below the $18/share level to pull the trigger - and that not being the result of poor economic news.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.