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  • What A Difference A Week Can Make In The Energy Sector [View article]
    The action in energy looks very much like the "taper tantrum" in bonds, mREITs and REITs in 2013. Stock prices got hammered and then based for 4-6 months, many having classic spread double bottoms. All the talk was about how high bond yields were about to go. However, bond prices have been rallying for 12 months and have slightly exceeded their 2012 highs. Now many of the REIT stock prices have recovered a lot toward their 2012 or 2013 highs, and the current yields are still pretty good, though down from their highs.

    I think its likely that the same will be true in energy stocks as it becomes clear that earnings are down. Dividends might be cut more in the E&P space than was the case with mREITS. As higher economic growth worldwide sets in, oil will rally, but from what low is not clear yet. I'm looking for a 4-6 month basing period (several weeks up then a couple months down to test lows) before any sustained recovery. Recently bought LNCO and BBEP with married put hedges, and sitting on July 2015 12-strike calls on SDRL with April 2015 12-strike puts. Long USO 21.50-strike calls and 21-strike puts.
    Dec 25, 2014. 08:46 AM | 4 Likes Like |Link to Comment
  • Why Cheap Oil May Be Here To Stay [View article]
    The drop in oil prices is another of those high sigma financial events, a black oily swan. What I'd like to know is who are the big counterparties to the producers' short oil futures (i.e. long speculators) and can they make good on their highly margined bets or are we to expect a financial event now, possibly a crisis? Also, is there a large credit default swap market on oil futures or oil company debt (still no public disclosure of the multi-trillion derivatives market)? If so, who are the big counterparties short the CDS on futures and debt and can they make good? Is this all going to create the next financial crisis? Also, how does this relate to the successful push last week by CitiGroup to repeal the Dodd-Frank prohibition against banks engaging in derivatives trading with depositors' and taxpayers' money ("hidden" in the appropriations bill)? Do they smell a goldmine in a CDS trade on oil futures or producers' debt?
    Dec 21, 2014. 09:50 PM | 1 Like Like |Link to Comment
  • Market Update 12/22 - From Overbought To Oversold And Now...... [View instapost]
    That's a really great review. I shared your calls at the bottoms in October and recently. Additional bullish signs are that the summation index completed a typical -400 point corrective move after the 1600 point up move from October, and has now turned from a negative slope to a positive slope, and the McClellan oscillator hit -75 at the latest bottom, a typical short term low, and has now crossed into positive territory. Now the question is whether the Summation Index will continue to the +1000 overbought level or whether there is more short term consolidation first.

    Of longer term concern is the NYSE bullish percent has been lower with each successive top since Feb 2013. Same with the hi-lo index. In addition, margin debt and valuation measures continue in or near record bearish territory.
    Dec 20, 2014. 02:22 PM | Likes Like |Link to Comment
  • Chesapeake Granite Wash Trust: Stress-Testing At $50 Per Barrel [View article]
    Do they sell hedges to match product sales, or save the hedges as a speculation?
    Dec 17, 2014. 08:55 PM | Likes Like |Link to Comment
  • Linn Energy: Distributions About To Get Slashed? [View article]
    LNCO has no debt. You meant LINE.
    Dec 17, 2014. 06:25 PM | Likes Like |Link to Comment
  • Linn Energy: Distributions About To Get Slashed? [View article]
    Chippy55 said "LNCO" not "LINE," however, I don't think they're 100% hedged. The nice part is they have no debt. Long LNCO with put hedge.
    Dec 17, 2014. 06:23 PM | Likes Like |Link to Comment
  • Natural Gas: Predicting, Especially The Future [View article]
    Long LNCO, BBEP, CHKR with put hedges.
    Dec 15, 2014. 10:32 PM | Likes Like |Link to Comment
  • Why A Dividend Cut Should Not Scare Linn Energy Shareholders [View article]
    Why not LNCO? NO DEBT! 92 quick ratio! Just raised the distribution, 31.7% current yield! P/B 0.44!! Long at 11 with 14 strike hedge and long at 9.10 with 10 strike put hedge. Sold half of 14 strike hedge since that was delta neutral at initiation and netted a nice profit. Might sell some OTM Jan calls.
    Dec 15, 2014. 09:56 PM | 1 Like Like |Link to Comment
  • Utility Rate Changes An Ominous Sign For SolarCity [View article]
    Apparently the insiders agree with you, since they've recently sold 97.44% of holdings according to data on finviz.com.
    Dec 13, 2014. 06:48 PM | 4 Likes Like |Link to Comment
  • Is This The End Of The 'Shale Oil Bubble?' Or The Beginning? [View article]
    Daily and weekly rsi's and stochastics are all at major bottom levels for almost anything energy related. Buy and hedge. One strong up day is likely to stop this train crash for quite a while.

    Some of the well hedged E&P securities look like marvelous long term income investments at these prices. How can you miss with BBEB's current yield at 25.6% paid monthly and the company is well hedged for a couple years? Buy at 8.xx/unit and hedge with 10 strike or 7.5 strike puts if you're worried about further price drop. I'm hoping for further price drop! Start selling calls if the dividend does drop significantly.

    Same thought about LNCO at 11.xx/unit (26.20% current yield paid monthly) which is mostly a natural gas company and pretty well hedged; is nat gas going back to 2.00/10000 MMBTU? Maybe, but LNCO is hedged and you can hedge LNCO units. NG actually rallied Friday as oil dropped; commercials almost as long as November, 2013 when the price bottomed at 3. LNCO very easy to hedge since it has options with strike prices at only 1-point intervals and good liquidity.
    Dec 13, 2014. 05:21 PM | 1 Like Like |Link to Comment
  • First Solar: Heading In The Right Direction [View article]
    Thanks for an informative article about an interesting company. I invest primarily for current dividend/distribution income, but keep an eye out for some long term growth investments. Solar and wind seem likely areas, and FSLR looks promissing. With the recent energy price crash the prospects for solar might seem to have dimmed, but the crash is likely to prove short lived in a few months or a couple years. The surprising lack of comments to this article might be a contrary indicator.
    Dec 7, 2014. 11:37 PM | 2 Likes Like |Link to Comment
  • 48 MLPs For Income: Are The 10% To 20% Yields For Real, Or Too Good To Be True? Part 4 [View article]
    As always from Mr. Carnevale, a superb article, well written, informative, educational and helpful to make investment decisions.

    One of your worthwhile thoughts of caution was to wonder "what might happen to MLP performance during a rising interest rate environment which they have never operated under." That's a great consideration since one would expect that any general increase in interest rates would negatively affect both the yield compared to alternative interest investments and returns on future investments funded by debt, and possibly current interest expense if and debt is floating rate. On the other hand, presumably rising rates occur in a growing economy, so revenues might increase. I don't know the answer, but it would be worthwhile to look at the performance of some old MLPs during the cyclical rises in rates since 1982 (e.g. 1998-2000).
    Dec 7, 2014. 05:52 PM | Likes Like |Link to Comment
  • How Could They? [View article]
    Ah, but don't you see, the downside is huge: Democrat policies and President being a hugely popular success? Musn't have that, they might get reelected.
    Dec 7, 2014. 01:13 PM | 3 Likes Like |Link to Comment
  • Oil Prices Will Rise Based On Fundamentals And Geopolitics [View article]
    Weekly chart of USO is very oversold: rsi(14) at only 16.33; stochastics at 5.4 and price way below 50-day and 200-day moving averages about as much as ever. Oil futures commercial hedgers the least short since the brief dip to 87/bbl in June, 2013 (COT data maybe a week old). Waiting for large traders to give up and go flat or short and commercial hedgers to go long. Because of slowing downward momentum we might see oil in tight range of 65-68/bbl and USO dwell in the 25-27 range for a while. Lets see how charts and positions develop over the next few weeks. My bet would be not likely much downside in the immediate future, and more likely a rally of some type. Intermediate term possibly a very extended trading range like gold has done for a year after initial breakdown before a move out of that range, or will WTI test 50 at some point near term and then reverse up sharply? Having failed to hold 70/bbl maybe it wants 50 near term before 80 next year.

    Note also that natural gas commercial hedgers are more long than anytime since early 2011 (however, in that case price rallied briefly then dropped significantly to the ultimate low around 2/10.000MMBtu). Must gas test the all time low of 2 before a turnaround? My guess is that 3.25-3.50 is likely to hold and then a rally.

    What's an investor to do? Maybe accumulate the well hedged E&P's that pay high dividends and then hedge those with puts. Moving out of hedged royalty trusts (CHKR, ROYT, SDT, SDR) and into BBEP, LNCO, ARP with put hedges; might get calls on CHKR and SDR or PR. Sold all SDRL at 13.40 and kept Jan 2014 14 strike put hedge and bought July 2015 12 strike calls; will roll puts down to 12 strike and out to Feb.
    Dec 7, 2014. 09:49 AM | Likes Like |Link to Comment
  • Indicator That Precedes Almost Every Stock Market Correction Is Flashing A Warning Signal [View article]
    The source you linked for ""the real economy" continues to falling apart" includes the following from an article on theeconomicollapseblog...

    "The stock market has been soaring and sales of homes worth at last a million dollars are up 16 percent so far this year. But most Americans live in a very different world. The percentage of Americans that are employed is about the same as it was during the depths of the last recession, the quality of our jobs continues to go down, the rate of home ownership in America has fallen for seven years in a row, and the cost of living is rising much faster than paychecks are. As a result, the middle class is smaller this Thanksgiving than it was last Thanksgiving, and most Americans have seen their standards of living go down over the past year."

    That's all true but, you see, corporate profits per share have been growing and long term interest rates have kept very low so the discounted value of cash flow has gone up. In addition US large cap stocks have about 40% of profits from foreign countries so the state of the US economy is not necessarily well correlated any longer. Companies have learned how to make profits even throughout the long great recession.

    The stock market is currently overbought by various technical indicators, and I expect a near term correction, but if the junk bond market is indeed an accurate leading indicator, it appears that the next correction will likely be limited to 5% since JNK has had about that amount of recent decline and is now in a nearly oversold status and poised to rally short term. We won't know the extent of the next stock correction for sure until the next short term oversold condition develops and a perceptible rally follows. There is no hint in leading economic indicators of a recession any time soon, so there's little prospect that profits will generally collapse. Long term it appears there is a great deal to worry about regarding the technical state of stock valuation, but JNK hasn't yet signaled much about long term prospects for stocks.
    Dec 7, 2014. 12:15 AM | 1 Like Like |Link to Comment
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