We have crude inventory numbers due out today among other big economic news that will have a heavy influence on where crude prices go today and over the next few weeks. We have increased our exposure to natural gas and oil as of last week and are in the green on that trade.
We think that commodities will be the place to have invested if the economy really is turning, and if it is not it might still turn out to be the best place to have invested as the Fed could unleash a QE3 Program.
If any readers have certain stocks they would like to get an opinion on, submit it to our message box here on Seeking Alpha or via our email and we will include it in an article. Please select companies with market caps at least around $500 million with volume of at least 1 million shares a day. We will try to include as many of these as possible each week.
Oil & Natural Gas
Carl Icahn came out on Tuesday and stated on CNBC that he would not be selling Chesapeake Energy (CHK). Obviously he just initiated a position in the past few months and has a respectable paper gain, so we doubt many thought he would be selling his position here especially after getting a seat on the board of directors. This helped the shares move higher in spite of the fact that the company is being investigated along with Encana regarding dealings in a potential bid-rigging scheme. Shares finished up $0.63 (3.36%) to close at $19.36/share on volume of 13.2 million shares.
Kodiak Oil & Gas (KOG) has continued to show strength as it trades above the $8/share level. On Tuesday the shares rose $0.46 (5.52%) to close at $8.80/share on volume of 6.3 million shares. We always find it bullish when Kodiak trades above the $8/share level, but with oil moving higher and the extreme leverage the company has to oil prices we would expect the shares to continue their march higher. Assuming that the economic data today are alright we would expect Kodiak to attempt a takeout of the $9/share level.
Coal
Patriot Coal (PCX) continued moving higher on Tuesday as shares rallied $0.46 (33.33%) to close at $1.84/share. Volume was extremely strong here, coming in at 17.4 million shares and this happened on a half day for trading. This stock has risen roughly 80% in the past two weeks and this is what happens with leveraged plays when fears of liquidity dissipate. We missed this one twice when trying to put in a trade, but now it has gotten ahead of itself as we suspect some of the bears were chased out and forced to settle their positions. A pullback is in order at some point, and we feel that investors would do best to wait for that one and then move in. The $1.50/share level would probably be a good place to enter and for those a bit more patient the $1.40 level would appear best.
Copper
Freeport-McMoRan (FCX) has had pretty good news as of late as investors expect more fiscal easing globally and the world economy to pick up as Europe appears to be solving its issues. The shares have moved higher, and continued this move on Tuesday. Shares rose $1.33 (3.93%) to close at $35.21/share on volume of 15.6 million shares. This was heavy volume for the company and quite impressive considering it was a half day.
Potash
Potash Corp of Saskatchewan (POT) continues the winning streak it has been on as of late. Shares moved above the $45 level in Tuesday's trading and maybe we will ultimately be proven correct in our prediction for this to be one of the top plays for 2012 (we doubt it, but things are looking up). The company has continued to get analyst upgrades and benefited from an improvement in the business environment. If the worst is behind us, we would look for this one to continue its steady move higher. On Tuesday the shares closed at $45.07/share having risen $1.10 (2.50%) on volume of 6 million shares.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
