Posted by: zmanbackup | April 14, 2010

Wednesday Backup Post

Market Sentiment Watch: CSX, INTC, and JPM beat estimates since the close yesterday setting a better tone for today’s trading. Oil is rebounding with equity futures. Not a lot of new energy land news today and the IPAA OGIS meeting wraps up today with a half day of presentations from industry small fry (still a few worth listening to including AEZ). I included an update of the Eagle Ford players in the Stuff section below as a lot of focus continues to target that group now, maybe a bit more focus than the Bakken group is getting since EOG’s big spill the beans on the area presentation.  Formatting of this post is off because this software is different from my normal post.  Hopefully my host will uncluster-snafu themselves this morning so we can get back over to the usual spot.

In Today’s Post:

  1. Holdings Watch
  2. Commodity Watch
  3. Oil Inventory Preview
  4. Stuff We Care About Today – HK Wrap, SSN, IPAA Day 3 (yawn), EFS update.
  5. Odds & Ends

Holdings Watch:

ZCAT (Zman Catalyst portfolio, formerly the $10KP II):

  • $14,760
  • 62% Cash
  • Yesterday’s Trades:
    • HK – Added (10) May $24 Calls Fro $1.10 with the stock at $23.20.

ZIM (Zman Inefficient Markets portfolio)

  • $16,750
  • 80% Cash
  • Yesterday’s Trades:
    • HK – Added (20) April $23 Calls for $0.75 with the stock at $23.35, up on positive news on several fronts (see post) and in a weak market.
    • HK – Added another (20) April $23 Calls for $0.65 with the stock at $23.20.
    • HK – Bought the final slug of my desired position. Added 20 more HK $23 calls for $0.50 with the stock at about $22.95, up 1.5% in a weak tape. Average cost is $0.65.

Commodity Watch:

Crude oil eased $0.29 to close at $84.05 yesterday, essentially moving with the equity markets. After the close, the API released a bearish looking report (see below). This morning crude is trading up 75 cents.

  • IEA Watch: Global oil demand to hit record high this year. IEA forecasts oil demand will be 86.6 mm bopd in 2010, up nearly 1.7 mm bopd from 84.93 mm bopd in 2009. Non-OPEC supply is seen rising 0.5 mm bopd this year with much of the rise coming from the U.S.
  • API Watch: Slightly bearish. Crude normally builds during this week of the year while products typically are declining.
    • Crude: UP 1.405 mm barrels
    • Gasoline: UP 1.61 mm barrels
    • Distillates: UP 1.714 mm barrels

Natural gas rose $0.15  to close the day at $4.16 yesterday as traders bought what the Journal called, a “modestly oversold” commodity. Reuters also wrote a story calling for accelerated declines as more natural gas players shift assets to oilier plays on the same day that HK notably did the same and notably stated that we are not an oil company and only will be an oil company if we get bought by Exxon. This morning gas is trading flat.

  • Early Read On Natural Gas Storage: Street is at 80 BCF for tomorrow’s report.
    • Last Week: 31 Bcf Injection
    • Last Year: 21 Bcf Injection
    • 5 Year Average: 23 Bcf Injection
    • 10 year Hi: 69 Bcf Injection
    • 10 year Low: 46 Bcf Withdrawal

Oil Inventory Preview


Stuff We Care About Today

Eagle Ford Shale Position Update:

Couple of Key Points:

  • Having acreage in the Eagle Ford Shale was the requirement to get you on the hot list several months ago. Now the focus has tightened onto the so-called oil window, the northern part of the play
  • Oil window have’s:
    • EOG – 87% of total position in oil window,
    • HK – 63% of total
  • Players programs and some data:

In the table below I have the acreage of the primary Eagle Ford participants, along with some assumptions regarding EURs and the relative value of this acreage to each company’s proved reserves.

Valuations are not excessive in the group:

SSN –  Another day, another update for the Gene Well.

  • SSN – flow rate update on the tape. 859 bopd with 1 MMcfgpd, or 1,027 BOEpd, oil is 45% of total production at this point.  Frac fluid is still being recovered and they will update production here again when production is stabilized.
  • This is lower than the prior day’s update of 960 bopd and 1.075 MMcfgpd or 1,139 BOEpd, with an oil cut of 40%.
  • Market may sell it off a bit more on this news but as they said in the prior report, the oil cut is expected to reach 70% as the well cleans up.  Either way, a respectable IP for a mid length Bakken lateral completion.  The company may be able to squeeze a total of 12 wells on their acreage position over time.
  • Note that this is just east of Rough Rider east where BEXP has scored two 3,000 BOEpd IP wells.
  • SSN also has 46,000 acres in the Niobrara play which may serve as future catalysts.

IPAA Day 3 Thoughts

  • Planning to listen to AEZ, GMXR, MHR, WRES and a few others today as the conference winds down.

Odds & Ends

Analyst Watch:

  • TBA


  1. Testes, testes, 1, 2 … 3?

    Hello, this thing on?!

  2. TPH with a Strong Buy this morning.

    But someone dumping shares in pre market. Stock trading sub $17.

    HK target upped $2 to $32 at Credit Suisse

  3. BEXP down 8% pre market. Anyone see a note?

  4. i see bexp as 18.25-18.35

  5. i show most stocks mostly up .. Hk up 40 cent
    even pathetic sd has a implied 10 cent gain

  6. Bill – thanks, glad not alone in here. BEXP was off early, looks like someone just wanted out and didn’t want to wait on the open so paid the price, maybe scared some others as well.

    TBP on CNBC now.

  7. BEXP called up now.

    EOG, HK others called higher as well

    NG up 2 cents, still rebounding. Big draw expected of 80 Bcf tomorrow.

    Oil and products higher this morning with equities, nobody paying attention to API last night.

  8. Tried to snag some BEXP in the 16’s and missed. should have taken the 17.20 offer. Darn it !

  9. Pack – hear ya, that was just weird.

  10. SSN called back to 70 cents on that well update.

  11. Credit Suisse on HK – took their NAV up which took the target up $2. Notably the firm took its EPS/CFPS down slightly on the lower expected production and an expectation of higher costs. I think that last comment is them getting bagged by the company. HK took the production volumes down on the switch from Hayensville to EFS and on the divestitures already taken. They had previously hinted they’d make their numbers even with the restricted choke program and with the divestitures. So taking their numbers down yesterday sets up beats in the out quarters for them. As far as costs go, analysts are assuming that LOE rises due to the oilier nature of the program. That in HK’s case is erroneous as the degree of higher crude production is very small, so small that I don’t think it lifts costs on a per unit basis. Numbers here are set to be beat especially if everyone trims a dime or so off the 2010/11 CFPS numbers.

  12. So…would the BEXP April puts have been whipsawed accordingly during pre-market? Curiosity question.

  13. Kaman – they don’t trade out of market hours so they should not be impacted.

  14. Good morning to all.

    A very bullish count and a bullish count! The bullish count says we are in an ending diagonal. Would complete between 1204 and 1212. Very bullish count says we are embarking on iii of iii of v with a target of around 1215 for this wave.

  15. We are going to be on the backup server for most of the morning it appears.

  16. Thanks Nicky, what a long strange trip it’s been since the recent rollover panic lows when most of the talking heads said we were about to dive below 1030.

  17. No peeps from TechTrader this morning.

    HeadTrader would buy any sell-offs at open. Good earnings from CSX, INTC, JPM, LLTC. And INTC and CSX especially saying nice things about outlook.

  18. ZTRADE – ZIM – HK

    Sold the 60 HK April $23 calls taken yesterday for $0.90, up 39% with the stock at $23.80.

  19. HK — darn fine call and execution, z! Got profits in ZIM… Book ’em, Danno!! nice.

  20. Thanks man, liking that model mucho! Keep up on the stories as always. Wait in weeds for the news. React quickly.

  21. Picking off the slow moving antelope. Makes for a great lunch! 🙂

  22. Wonder if someone woke up this a.m. and remembered that EXXI is 68% OILY production. Sheesh. That one requires patience and knowledge. As much as “we” talk about it here, EXXI is still pretty much unknown in the investment community at large. Makes for some inefficient days. But inefficiency creates opportunity too.

  23. Random thoughts… if/when EXXI gets smacked this summer on HURRICANE FEARS, I plan on adding a boatload more to the BOP LT Portfolio. Then sit back for the next two years.

    Plan the trade, trade the plan.

  24. BOP – and often the whole group will move higher in the face of any really threatening Gulf storm. So you could pop out of some on that peak and reload if there is damage or if there isn’t.

  25. Main site is back up but I’m staying over here today for now at least as my host has told me it may go down again.

  26. z — exactly. I think EXXI will be fun for both investors and traders this summer. It’s bouncy bouncy bouncy, fun fun fun fun fun… (to paraphrase Tigger) for both camps. Have to know the story and be willing to POUNCE when the opportunity presents itself.

  27. Wow, HK back to even on the day. It’s good to be fast sometimes.

  28. Since the chart of ERF (a Canadian MLP converting to corp. ) looks good I listened to their IPAA talk. Internal growth and income strategy, growth from a Marcellus JV they farmed into and US and Can. Bakken. Different strategy than US MLPs who get growth is from acquisitions. Does anyone have thoughts on co. and mgt?? Mgt only got half way through their slides, don’t know if they have sufficient cash flow to fund capx and distribution growth.

  29. I don’t get why HK is getting so whacked……….

  30. HK acting pretty poorly given the size of the sales, the refocus on oilier EFS, and the results in the EFS. This reminds me of the trading after the last couple of smaller asset sales. HK management has got to be scratching their heads and wondering what it is that the Street wants from them. Ticking off the positive things of late aside from those mentioned:

    Asset sales exceeded the $1.0 B target coming in at $1.4 B and ahead of schedule.

    Balance sheet is bolstered by same and the last deal so that debt /equity is no longer towards what you’d call high.

    Largely hedged and higher than here for 2010

    Growth still over 30% for 2010, probably same 2011

    Promised no more equity issuance 2010/2011, again, deals done makes that easily possible.

    So what’s left to cover to get them more of an RRC type multiple? Hmmm.

  31. HK — any reason to repeat? (Now that you have so successfully completed the wash and rinse cycle…)

  32. Color on IPAA lease trends & discussion of top leasing from Wunderlich today. Also, note that MHR is going to 3 EFS spuds up from one.

    Wunderlich Securities, Inc.: IPAA New York Day 2 Report – Acreage Gone Wild

    The second day of the IPAA (Independent Petroleum Association of America) New York Oil & Gas Investment Symposium (OGIS) was more highly attended than the first day, with many of the presentations and breakouts having standing room only and the one-on-one schedules of companies being essentially full. We spoke with many E&P companies in compelling regions such as the Eagle Ford and Bakken that have seen acreage prices double relatively quickly, and many of these plays are being top leased by companies hoping to see some leases expire. Overall, the theme continued to be an oil focus while natural gas was looked down upon by most in attendance, even as natural gas focused players talked about the long-term viability of the plays. Additionally, we continue to hear that services, specifically pipe, frac sand, frac crews, and drilling rigs are rather tight in the active regions.

    Key Points

    Acreage prices are moving substantially higher in the Eagle Ford and Bakken regions. We heard today of Eagle Ford acreage going for $4,500 to $5,000 per acre in some cases, due to the continued strong results from the region, and we even heard speculation that prices in some regions have gotten to $10,000 per acre. Additionally, the Bakken play continues to see its acreage prices and overall size of the play expanding exponentially.

    Top leasing in the these plays has become very active. Top leasing is when a company pays a mineral owner for the option to sign a new lease even before the lease expires. It generally costs 10%-25% of the current going rates for oil and gas leases in the area, as it is essentially a call option to lease the land if the current leaseholder doesn’t drill on the acreage and the lease expires. This has become relatively commonplace in the Bakken and the practice is now moving to the Eagle Ford due to the strong results in these areas. Top leasing activity could make E&Ps in the regions look to create joint ventures or bring in partners in order to keep acreage, which would then allow the original lease holder to keep the acreage.

    Magnum Hunter Petroleum (MHR-$4.20, Buy) looks to continue its growth both organically and through acquisitions. The company expects to add about 6,000 additional acres in its core Eagle Ford regions in the near term and could also sign joint ventures in order to increase its exposure. The company also is actively looking to acquire companies/acreage in the Marcellus region to increase its position. A key fact is Magnum Hunter’s 42,000 acres are held by production. Additionally, the internal growth of the company should increase shortly, with the drilling of three Eagle Ford wells beginning in May and drilling in the Marcellus expected later this year.

    TransAtlantic Petroleum (TAT-$3.54, Buy) continues to be one of the busier companies. Company management spoke of the continued rapid activity throughout Turkey in existing and new plays. We believe the recent news of the National Oil Company of Turkey becoming a partner is important for activity going forward. We anticipate production picking up incrementally throughout the year. Given that most of production is oil, we anticipate cash flows increasing smartly as well.

    Gulfport Energy (GPOR-$14.02, Buy) could see even more growth in 2010 than expected. The company intends to spend $56mm-$62mm in CAPEX this year while producing cash flows of $90 million at current prices. Gulfport intends to use the additional funds to drill more wells (specifically in the Permian), which could increase production and reserves nicely above the current expectations given CAPEX could increase nearly 50%. We would expect this announcement to happen in 3Q10 and the production gains to boost production in 4Q10 and 2011 nicely. Additionally, the oil sands exposure for Gulfport continues to become more valuable given recent deals in the area and activity around Gulfport’s acreage position.

    Venoco Inc. (VQ-$15.31, Buy) is likely to announce something substantial relatively soon. We look for the sale of the Texas properties, other than Hastings, to be announced any day. We believe it could be material if the company is able to receive anywhere near $100 million for the properties as this would provide more ammunition for the Monteney Shale. Though production is estimated to be relatively flat today, nothing is baked in for the exciting Monteney Shale, which we believe has the ability to increase production smartly. In addition, the fact that much of the incremental production is oil is quite positive in the current environment.

    GeoResources (GEOI-$17.47, Buy) Bakken story keeps getting bigger and better. The company was able to pick up an additional 2.5% interest in its operated Bakken play, which now sits at 22,500 net acres. GeoResources also released an operations update yesterday that shows the continued strong results from its non-operated Bakken position, which has five gross rigs running on the acreage currently. We look for GeoResources to see continued strong results from its non-operated Bakken position while we are also anticipating solid returns from the company’s operated Bakken acreage in Williams County with Resolute Energy (REN-$13.32, Buy). …

  33. BOP – re HK. Don’t know. Definitely not going to do it pre EIA inventories.

    NG up another 6 cents. Group looks tired, could care less.

  34. Eli – what’s MHR’s acreage position in the EFS?

  35. ng is up 7 % last 5 days FWIW Im hoping for a sd bounce back to help my ARD position

  36. Z: Nice HK trade. You are THE MAN

  37. building a position in oily dnr, stock down today for some reason, their oil isnt as good as others

  38. Jerome… the chart of EXXI from Feb to now looks a lot like the chart from mid-Oct to mid-Dec. Any reason to think we might get the next leg up here (like the end of Dec to mid-Jan)?

  39. BOP…you bet…updated the exxi charts the other day…I like it a lot…

  40. Thanks, Jerome. Your charts are AWEsome.

  41. Main site will be back up tomorrow on a private server.

    Housekeeping Watch: I will be out tomorrow morning until noon for a family matter but will post the Thursday post late, late tonight.

    Oil numbers in 8 minutes.

  42. Z – We will know MHR’s EFS psn in 1 hr as Gary Evans is scheduled at 11:40 EST.

    Prior to presention it was described as follows subsquent to the EOG news: “75% of MHR’s ~15,000 net acres in the Eagle Ford Shale oil window are in northeast Gonzales County, nearby EOG’s acreage position. The remainder of its acreage position is further to the northeast in Fayette and Lee counties” Rodman on 4/08/10

    Gary’s crew are pretty fast movers. I would not be surprised at additions.

  43. Thanks Tom, that worked out well for those quick on the trigger.

  44. Thanks for keeping us updated on that mutt Eli. It has really shined for you!

  45. useg has an intereest in bexp weels

    you may want to look their slides over as they discuss the bexp exposure

  46. wizard – check your email

  47. EIA Oil Inventories: Oil up 30 cents prior to numbers

    Oil down 2.2 mm barrels
    gasoline down 1.1 mm
    dist up 1.1 mm

    pretty bullish at first glance.

  48. SunTrust maintains a ‘Buy’ on EOG Resources, raises PT from $152 to $172.

  49. Imports fell sharply explaining much of the oil number

    Gasoline demand was very strong at 9.325 mm bpd
    Distillate demand was fair.

  50. Probably a very good set of numbers for the refining patch. Tempted to go after VLO or SUN, maybe FTO.

  51. Wow Al, that’s a big upgrade.

  52. Thanks Alhambra! Tucked EOG into the LT holdings y’day on weakness. Another “buy-and-sit-for-2-yrs” holding.


    Added (10) EOG May $115 Calls for $2.05 with the stock at $108.30.

  54. Good to see TAT rallying back 5% after that little dip yesterday. Name continues to execute well.

  55. Analyst Watch: HK

    Raymond James ups target $5 to $31, keeps Outperform.

  56. And Credit Suisse added it to their Focus List.

  57. Crude stocks are now down 3% from year ago levels and up only 5% vs the five year average for this week of the year, a slight improvement over recent weeks.

  58. Hk making an effort at finding support at the $23 level…see Hk charts…if considering a long ….stops need to be under the 100 day at $22.74…the weak price action down here…the way it got to support this morning… makes it a high risk trade, but it’s a low risk setup with so-so probability…but if it rallies off support….

  59. statoil and chk deals

  60. Not that its news to anyone here but this 65% thing continues to make me think WOW:

    CHK is currently operating 118 rigs with plans to move 20 of its natural gas-focused rigs to oil/liquids plays given low natural gas prices. CHK is not likely to further reduce its natural gas drilling in 2010 due to hedges but would likely reduce activity in 2011 if natural gas prices remain at current levels and it does not have the chance to add incremental hedges. CHK indicated that its current rig count might have been reduced by up to 65% given current natural gas prices if it was not drilling to avoid lease expirations. – Boenning & Scattergood

  61. ELI – yep!

    JB – considering a re-entry of HK myself.

  62. KOG looks much better today…updated the 30 min chart…


    High risk. Added 20 April $23 Calls for $0.55 with the stock at 23.18, not moving with the group despite yesterday’s news, strong crude, and favorable broker comments from a number of firms. Seems odd. This will be another quick one. I continue to own the common in the ZLT.

  64. BOP…special case…CIGX should probably be watched for entry opportunities down here…fundamental thoughts?

  65. TAT trying to break out again.

    SSN down only 2 pennies now, pretty much no sense of panic there.

  66. Anyone have a link to the AEZ webcast?

  67. CIGX — thanks, JB. Just contemplating that exact same thought. We run the risk of a news-gap between now and mid-May. But there are about 10 reasons why this stock will be higher by the end of this summer… and only about 3 reasons it could be lower. Other than INTENSE VOLATILITY, I am pretty comfortable holding CIGX, given the underlying fundamentals.

  68. Crude up $1.45 now at 85.50
    NG up 6 cents to 4.22

    Stocks mostly green but barely so. HK trading very oddly.

  69. BOP…thank you for your CIGX thoughts….

  70. Re HK – just watching the trading and the volume. High volume each minute, looks like a fund is coming out.

  71. Crude up $2 now

    NG up 8 cents, somewhat surprised at the lack of a real response by the Group.

  72. Jerome, really appreciate your charts/vote for you every day! You are a valuable asset here!

  73. nna warrants have doubled to 1.55

    Longer term, (3 years) with things going right, they could be worth 5 to 7

    1 year 3 bucks if nna can hold 10.00

  74. Nice trade Bill.

  75. Once the fund is done unloading, HK may well act like a springboard…….

  76. Isle – yeah, kind of my thinking as well.

  77. pati…thank you much for the votes and kind comments….

  78. Service stocks really moving higher this morning, OIH up 2.4%. E&P not so much.

    MCF is moving into new territory though. ATPG rising as well and in fact, most of the offshore names are up, save CPE.

  79. USEG: a friend met with co. & thier comment, “wait untill you see the first quarter.”

  80. RMD – that makes sense, should be a big, big revenue number.

  81. BEXP also trying to get back a little ground now.

    HK still acting odd.

  82. heard a lovely rumor… “foreign” entities looking to buy into the Bakken… that makes a lot of sense. Pick up info and expertise, export to your own country. Voila’

  83. Goldman has a (convoluted) strategy piece concluding energy equities are ~10% inexpensive rel. to oil prices. FWIW

  84. Oil back over $86 now. Stocks look to be mostly sleeping through that so far.

  85. BOP – best guess, anyone not from China. BP at top of list.

  86. Could be a short squeeze going on in ATPG.

  87. Still looks ED ish but may only be iii of v. 1212 is still a possibility but we really are in the stratosphere and there are negative divergences everywhere.

  88. END spoke at IPAA today, must have said something exciting. Up on large volume…anyone listen to presentation? I have not been in this one for eons

  89. Was going to listen to END but am caught up with site stuff today. Trying to get the other site back up.

    TAT at $3.86, breaking out again.

  90. Z and BOP: Looking at some SD bonds 8.625% maturing in 2015 selling for about par. Z, I know you’re not a bond guy but wondered if you have any thoughts on the prospects for SD over the next few years. BOP = any thoughts? Thanks much.

  91. Isle – tough call. If they get this deal done then I think they’ve pulled off the stealth secondary and given themselves a lot of breathing room. If not, then it largely depends on natural gas prices. I think at $4 the stock and company dwindle. At $5 they’re probably OK but suffer under their debt load.

  92. Thanks Z….appreciate the input!

  93. Isle – I’m afraid I’m not much help there.

    TAT – all time high.

    Energy feeling like pinning action setting in.

  94. Isle — i’ve thought about those SD bonds too. Just can’t get comfortable enough with what Tom Ward is up to these days. If he can pull it off, stock will move a lot higher and bonds will pay you 8.50% or so. If he can’t (b/c we are in a low nat gas price environment forever) then both stock and bonds will crater. Given the risk/return profile of the equity and debt at SD, I would rather be in the equity, if I thought they could pull it off (which they probably can).

  95. Beige Book headlines do not look bad

  96. HK volume > 12 mm with 2 hours to go. Very high, strange.

  97. HK thought, so much volume at the same price or very close to $23, sounds like someone is working a large cross between big buyer and big seller.

  98. question from yesterday’s hk meeting. He was talking about using a smaller choke. does that mean that they can control the amount of gas coming out and thus reduce the percentage drop in the first year. Also, if you are drilling to hold your lease, do you have to have production from that well? what i am trying to figure out is the natural gas market has been coming off because of the increased drilling, but what if the increased drilling doesn’t mean increased production.

  99. Thanks BOP….appreciate and value your thoughts!

  100. Eld – yes, that’s the idea. Produce less initially to produce more over the long term.

    For leaseholding – yes you do. You cannot drill in the Haynesville and not complete to try and hold acreage.

  101. HK — HeadTrader says that FBR traded 2.3mm and BMO Cap traded 1.7mm. He is scratching his head on the price action as he points out there have been “tons of new reprots today, all maintaining their [buy] stance…”

  102. Thanks BOP, some wanted out and is selling into that news. Hopefully someone has a bigger buyer who will exhaust this seller. Jefco used to be very efficient at crossing like this.

  103. EOG > $109

  104. then it is reasonable to assume that production might not be as large as the specs think it might be.

  105. Eld- Do you mean based on the restricted choke? It probably won’t make that much of a difference. The real difference comes when the rig count tumbles (probably mid next year) and production growth reverses. You still have 80% first year declines here.

  106. HT pointing out that CHK down too…

  107. Sure BOP, as are many names, but the volume in HK with the lack of move points to a crossing to me. That and the upgrades and HK’s news being swell and all … When the volume dries up it should lift based on the day’s action. Unless the seller is just big and there’s no one to soak up the shares. Fido is the big dog in the name and they are notoriously heavy handed when coming out and or downsizing positions.

  108. Z: RIG fleet report out and SDRL had decent day rates. Offshore boys and girls acting well.

  109. Jerome…. what’s the next stop on the EXXI chart? Assuming this is the next leg up.

  110. HK — i bought in the BOP LT Porfolio y’day at 23.40… so no push-back from me! On a day like this, following all the upgrades… why HK isn’t at $24 is a head-scratcher.

  111. But bought EOG at 106.40 y’day too… so, the world is still tilted toward the positive side.

  112. Z: Car sales in China up 68% as per GM. If that keeps up I doubt crude can go alot lower.

  113. Hear ya BOP, EOG acting very well. A bit surprised the elevation of that $172 Suntrust target, not that he can get to such a number but that he would publish it all at once instead of letting the results derisk the acreage over time, thus upping the NAV. Kind of a rookie move that lifts an eyebrow and sometimes a stock but is so lofty that few put much stock in it.

  114. Tom – thanks and no doubt. I was surprised to see how strong demand in the U.S. was last week, despite prices. People are driving around buying stuff.

  115. Schiller must have impressed some folks at dinner last night, EXXI breaking out of this 3 month long base.

  116. I don’t know much (nothing, really) about charts… but I have been told that the “stair step” formation is one of the strongest buy-signals out there. You can overlay the “stair” from mi-Oct to mid-Dec with the current stair from end of Jan to now. Are we about to step to the next riser? Maybe so… One thing I know is that even at this price, you are getting a “free” call option on DJ et al. Granted we won’t get the next trading-fix on that until 4Q (or so) with a production test. But looking forward to hearing about some of EXXI’s OILY development wells on the next conf call. Caveat, their FYE is June 30th… so the next quarter will be a long wait.

  117. Eying my April WLLs for an exit.

  118. TISDZ making another strong move … someone must think there is some ultradeep news on the near term horizon.

  119. HK volume higher than yesterday now.

  120. Just an update on the two possible counts I am watching.

    The bullish ending diagonal – would end with another push higher but not higher than 1212.90.

    The more bullish count has us in iii of v. This wave would end between 1215 and 1222.

  121. Thanks much Nicky

  122. Any number of $1 buck wonders are now trading within grabbing range of a $5 handle and the ensuing institutional second wind. KOG MHR et al. And the extension over trading over 5 affords the potential of moving share price north to Alaska witness AEZ, NOG and many others.

    Earlier this year, Gary Evans at Enercom made the statement that this year MHR would “drill a well in the MS and drill a well in the EFS and then be issuing stock @ 5.00 by year end and that everyone will be smiling about it.” That cavalier remark rightly offended many at the confab.

    Well, assuming the general market stays on the tracks, $5.00 will probally happen by Friday and the financings will probally be at $7.50 or above. ONLY IN AMERICA, as fundies won’t get in the way of a good story in the hands of IBankers. Even those offended at the thought of a 2 buck cucker diluting them a $5 will be happy to lower their standards and get some of the good $7 buck stuff.

    Ranting as I let some go last Friday (thankfully small)………and yes I am looking back and thinking that I’ve seen this movie before.

  123. BOP…EXXI…near term the next resistance point looks to be right above us here at $21.50…looking out longer term at next major resistance, I’ve added a weekly chart….the weekly points to a price closer to $30

  124. I should have added that due to the cycles my preference is for the more bullish count.

  125. thank you, Jerome. Looking at MMR… is that a “broken” chart? Or the FFT Formation? (Famous Flying Turd…. excuse the Trading Desk Talk)

  126. elijah — Gary C. Evans shore knows how to play the game. Heck. He may have TAUGHT the game to a few bankers. Anyway, it was a gutsy call on your part. You made $$. You played it right back at him!

  127. The Fed ought to be pooping themselves. They have created a bubble and if the recovery is to be believed they should be hiking rates and fast. Instead they are a million years behind the curve. I suspect Bernanke earlier was either being less than optimistic as this is the bubble he fears and can do nothing about or he just did not want to make another bad call.

  128. BOP…MMR…you know…I’ve seen a lot worse…actually, I’m going ot post a 30 min…MMR is really hanigng in there for a stock on a P&F sell signal…it’s got to break above topside trendline reisistance on that bearish descending triangle on the daily, I’ll try to post more tonight…but the intraday still looks promising..

  129. Uncle Ben was late to figure out what was REALLY going on last time… guess he hasn’t learned much from almost blowing up the Global Banking
    System. (He didn’t start it, of course, but he was fiddling way too long, while Rome burned).

    It it b/c it’s an election year????? UGH.

  130. I’ve said all along rates will be too low and money will be cheap for too long.

    There is no pracitcal way to drain the liquidity.

    We will see inflation and do see inflation whether it’s being reported in CPI or not.

  131. beerthirty. Hopefully the regular site will be working normally in the morning. I will advise as to its status here and via email when I know more.

  132. BOP – cycle wise mid term election years are very bullish. However not before we see a pullback in the middle of the year. Likely we top July/August, down into October and then up hard into the spring of next year. By that time I expect us to be near the all time highs. That sounds like pure insanity to me. We have hyperinflation on the way, soaring interest rates, increased taxes – I can see how we are setting up to go back into the abyss. What is amazing to me is how we are all going to get a chance to reshort this market and ride another huge wave down.

  133. Nicky — you seeing any uptick in the homebuyer mrkt? Even with low interest rates, the jobs mrkt still stinks.

  134. BOP – I have seen a lot of movement in our local property market – mainly due to the fact that prices are now down 50% and investors are stepping back in. I heard someone else say today that they had seen a great month in the 3 States they cover in real estate. I suppose this could be due to the Home Buyers rebate finishing at the end of this month again.
    I spoke to a Broker today and she said people are still extremely nervous about the real estate market and fearful of jumping back in.
    None of this bodes well imo. What on earth is going to happen to the real estate market when they start hiking rates. We will see our double dip I suppose only this time it will take down the top end of the market imo. In our area this has been largely unaffected up until this point with people resolutely refusing to lower their prices. We now have a huge disconnect between the upper and lower end of the market. When the top end capitulates everything should finally get back in sync and the market will do what it should always have been allowed to do. Its going to be a painful process watching the end game play out though. All this just imo. Maybe the opposite happens and they kick start another bubble in real estate!

  135. I should have added that the movement I have seen is all at the lower end of the market.

  136. UPS pre announces easy beat

  137. NOG on the tape offering 5 mm shares

  138. JBHT = volumes up
    UPS = guideup

    Pogo says to investors everywhere “remember the sheer velocity of price appreciation during the internet bubble!”

    BOP for you bond trader types I believe the correct term is the “convexity of prices”

    Rates stay at 0 at the front of the curve.

    Get Ready.

    Great wealth (or the detruction thereof) is created in very short windows in the market.

    I am tempted to buy everything under $10 in shareprice and short everyone on bubblevision rambling that “size and quality” will lead this part of the cycle.

    Never has never will.

  139. NOG apparently done @ 15

  140. Nicky — thank you for the real estate update. Nothing beats hearing the insights of an insider.

    Elijah — convexity… the 2nd derivative of the %age change in bond price vs %age change in interest rates. The 1st derivative is “duration,” of course. That is why Disney was able to issue a 100 year bond in the mid 1990s (the DIS 7.55s of 2093). The duration was not statistically different from a 30 yr bond… but the convexity was huge. Love that stuff. Makes the corporate and mortgage bond world go round.

  141. duration = speed… but convexity = acceleration.

    let the games begin!

  142. BOP thats a textbook perfect discription. Very nicely done.

    Now down here in ARRRRKansaww its Peddle to the metal as we learned it.

    I remember the DIS paper and on the other end the Buffet deal as well where bondholders were actually paying him.

    The classics! The nerve!

  143. Whoa… don’t recall the Buffett deal (i would make it a perpetual security, if that was the case)… but recall the DIS deal well. It was mind-boddling in 1993 that someone would issue a bond due in 2093. There were a coupla hundred yr bonds done then, as i recall… and a few 50 yr bonds too. Right before the mortgage mrkt got slammed… POs blew up and IOs soared. Pension funds discovered all sorts of “imbedded options” in what they thought were “plain vanilla floating rate notes.” Some things never change.

  144. VQ up on healthy volume..

  145. nicky – talked to high end broker on longboat key who echoed your comments today. the low end stuff (which he rarely deals in) has bottomed out and the inventory is rapidly drying up. the high end stuff remains not moving due to sellers not really lowering their prices and buyers waiting for that to happen

  146. We should be up an running on the main site in the morning.

  147. Thursday (in progress) posted on the main site. I will update some more over night but will be away for a good chunk of the morning tomorrow including the open.

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