Oil & Gas – Get Some!

Seeing lots of red out there…but with oil hitting new highs again, calls in [[CHK]], [[DO]], [[DVN]], [[EOG]] make me smile.

[[HERO]], [[PBR]], [[RIG]] (no positions) are up nicely as well…not to mention all the other metals & mining stocks.  So stop messing around with the banks and buy some oil stocks…with the profits you just may be able to afford your next tank of gas.

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I figured I should start off my 2nd term as King of the PG similar to the 1st, with an introductory post.  However, this time, it gets to serve double duty…as in, should I win Tuesday’s grand elections, this is what my permanent tab would be all about as well.

So…what can you expect?

1. Daily summary posts.  Level of detail usually depends on mood/time…
2. Ideas/watchlists, usually for the next day.  Usually just a list of names/tickers, but charts do make an appearance fairly often.  Often contains links to other bloggers’ ideas.
3. Details of strategies that I use.  For example, I still owe Woodshedder my ‘anatomy of a strangle/straddle trade’ post.  (It’s coming…like Dr. Dre’s next album.)
4. Whatever else that may come to mind.  General interests include music, movies, sports, and I’m getting back into reading (just started on Blindness).

My trading style is based on a fairly strict set of rules that play well with the amount of risk with which I’m comfortable.  I trade options and options alone.  Most of my trades are based on short-term technicals, but the earnings strangle/straddle is a guilty pleasure that I usually find hard to pass by.  I tend to hold positions for 4-5 days, but usually sell at the first signs of weakness.

In any case…I’m sure I could write several thousand words more on this, but as Lord Jeremy proclaimed, it’s good to keep things short, simple, and to the point.

So, come on by, (at least) every once in a while.  You may like what you find. 

(And if you already do, don’t forget to vote for DPeezy on Tuesday!)

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Hands down, no contest, by far the best movie of the year (so far).  Perfect amount of humor, action, and story.  Robert Downey Jr is simply phenomenal.  Go see it now!

[youtube:http://www.youtube.com/watch?v=yZp2qpZtfbo 450 300]

More later…gotta go enjoy this beautiful Sunday.

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My tenure as King of the PG ends today, so I want to say a few words before I cede the throne to my successor.

First of all, kudos to The Fly for upgrading IBC and providing us with his high IQ market perspective and stock picks. His patience with the throng of internet leeches attests to his character and unselfishness in sharing information. The fact that he keeps this a free, open forum, without cost to traders with “one comma” accounts, is commendable, despite calls from several to bring back the futures quotes. We are not worthy of such benevolence.

Secondly, I tip my hat to all the contributors to the PG, as well as those who comment on the different threads. You all provide good entertainment value, and sometimes (aka, “once in a blue moon”) worthy insights into the market and individual stocks. Seriously, this is truly a good place to park and glean ideas and observe the outrageously funny (and occasionally gay) banter from the PG and others here.

Also, the current “Tabbers”, Danny, Wood, Rage, Gunners (Tabber Emeritus) and Adam are excellent. You all deserve a pat on the back, the admiration of the PG, and a six pack of Monster. In addition, the current slate of candidates for Gunners slot is quite formidable. It will be a close race. Good luck to all.

Finally, my take on this current market environment:

I look for commodity prices to come down. This nearly seven year bull market in commodities has ridden on the back of the booming global growth and a weak US Dollar. However, considering that commodity prices for the most part have shrugged off the current downgrades in global growth projections, and have ignored the prospects of a stronger dollar, we may be seeing this bubble start to pop.

With the Fed possibly cutting another 25 bps today and then potentially pausing for a period of time, we will most likely see a bounce in the dollar, much to the enjoyment of Ben and Hank.

The crux of the matter seems to be rising food and energy prices which are occurring in the face of weaker payrolls and labor trends. The stock market will have to recognize that this current loss of purchasing power cannot be ignored. Herein lies the risk to the current uptrend this month.

The consumer cyclicals are the greatest risk. They are the most sensitive to changes in purchasing power and the increasing cost of necessities. [[WMT]] has basically put many specialty retailers out of business (or soon to be). This is Capitalism at its finest. However, lest we write-off the consumer cyclicals entirely, they also stand to benefit the most, relative to the rest of the market, from a pause or correction in the past 12 month trend in commodity prices.

Be aware that interest rates are key right now. Many of you do not bother to follow the bond market, apparently because you think that bonds are for asshats and those over 47 1/2. However,  it is important to note that the bond market is beginning to believe that the Fed is starting to catch up with the economic slowdown. If you look at the spread between the 2 yr Treasury and the Fed funds rate, you will see that it is increasing, which means that additional rate cuts are being priced out of the market.

This increase in the spread at the short end of the yield curve is forecasting a potential floor under the US Dollar and a cap on commodity speculation. This development is a key to the direction of the US stock market.

Keep a close watch and a vigilant eye on this.  

And no, I do not know how to trade “The Triangle”.

That is all. Carry on, gentlemen.

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Update: The Red Sox beat the Jays 1-0, with a run in the bottom of the 9th. Fans witnessed a great pitching duel between Jon Lester and Roy Halladay.

(24-year old Jon Lester of the Boston Red Sox)

In other news, the Yankees lost to the Tigers 6-4. Oh, the joy….

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Lots of talk about the Fed meeting today for their two-day session. The interest rate decision will be coming tomorrow at 2:15 ET. As you already know, it is widely expected that we will see a 25 bps rate cut, bringing Fed Funds down to 2.00%. That adds up to a 3.25% cumulative rate cut since September.

Expect this to be the last cut. The next move by the Fed will be a rate increase, perhaps by December, if the economy shows signs of recovering.

If for some unknown reason you have been buying bonds for their low yields, now might be a good time to start moving out before the exit doors get crowded.

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