Commodity markets remain mixed coming off of the European news, and we tend to think that the commodity markets are a better leading indicator than the stock market for numerous reasons, so we do find this a bit alarming. We will continue to monitor our watch lists for some buys, and fully intend to put some money to use after we have the jobs data out on Friday - that is one train we do not want to step in front of right now. We are looking at some natural gas partnerships to buy right now as well as Utica plays. We have stated that those will be the first plays out of our playbook when we begin buying and we still see it that way this morning. Today will be a half day for trading, so one should not expect much volatility or trading to occur.
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Oil & Natural Gas
ATP Oil & Gas (ATPG) announced yesterday that it hit gas offshore of Israel in a play which it owns a 40% interest. The well, Shimshon is estimated to have about 2.3 tcf of natural gas reserves. The company's shares rose $0.65 (19.35%) to close at $4.01/share on volume of 8.8 million shares.
Looking at Kodiak Oil & Gas (KOG) we see that the shares are hanging in rather strongly now that they are above the $8/share level. The shares opened lower, but worked their way higher throughout the trading day yesterday to finish at $8.34/share having risen $0.13 (1.58%). Volume was strong once again here coming in at 7 million shares traded. So long as oil remains strong, Kodiak shares will too.
Patriot Coal (PCX) was the big winner yesterday in the coal sector with shares rising $0.16 (13.11%) to close at $1.38/share on volume of 8.1 million shares. It seems that there is a trend developing here where the company does not move in tandem with the rest of the coal shares as it seems to rise when the sector is weak as of late and fall when it is strong. Obviously there is some attempt at price discovery here between bears and bulls and this we find interesting this morning.
Also of interest this morning and in the coal sector is Peabody Energy (BTU). Shares rose $0.34 (1.39%) to close at $24.86/share on volume of 9.8 million shares Monday and we are moving towards a possible breakout area. Before the shares can breakout however they will have to move through a downtrend line which has not been breached to this point. We will watch this judiciously as this would change our thinking on the neutrality of our investing position, and as always we will keep you updated moving forward.
Turning our attention to Vale (VALE) this morning, we see that shares closed above $20/share yesterday. Volume was lower than usual as the company traded 10.1 million shares, but the price action was good. Shares rose $0.25 (1.26%) to close at $20.10/share. This is one of the recovery stocks we have recommended playing, but our need (or should that be greed?) for a lower entry point has caused us to remain on the sidelines.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.