As Hot Money Flees Commodities, Picking Up a Little EOG Resources

I am adding a second name to my mini natural gas basket, which I started Monday with Cabot Oil & Gas (COG)... I am beginning a small stake in my #1 target EOG Resources (EOG), which has some very impressive new expansion opportunities recently announced. [Feb 29: Natural Gas Focused Exploration & Development Companies Continue to Shine] Much like the fertilizer stocks which have been impervious to meaningful slowdown it has finally taken some hit... down to its 20 day moving average of $115. I am starting small since I think more downside to go, and am targetting $106-$108 (which is just above the 50 day moving average). There is a
"gap" in the chart around $108 which almost surely will get filled.

It appears the commodity trade is being abandoned by hot money so I'll be waiting at lower prices to scoop these guys up when/if they get to my targets. In the meantime we'll take the body blows as positions dominating the fund falter (temporarily). But we're only in day 2 of what could be a longer pullback in these hot money groups, so I'm not jumping in too aggressively yet.

I started a small stake of 0.5% of fund at $115. Looking to add significantly at lower prices.

Disclosure: Long both names mentioned in fund; no personal position

Comments

[bsharvy]

Have you looked at XEC? It's valuations are low, but I recall hearing somewhere that its cost of mining is higher than average. Also, what about renewable natural gas like EPG?

[John Egan]

I dunno... For pure gas plays, what about CHK (Chesapeake).. The CEO is buying his own stock hand over fist ...

Also, If I remember right, isn't it a little early to buy NatGas? Seems to me the buying should be about a month before the summer A/C season....

Thx jegan ;-)

[Donpow]

I've learnt a long time ago when the police raid, they take all the girls. I would wait until energy sector settles down. Technically they look weak here along with commodities. Your multi buy strategy is a good one but you have plently of time to accumulate. It is too soon right now. Let's see where this recession is going. Cash is king