Posted by: zmanbackup | November 15, 2010

Monday Morning – Main Site Slow And / or Down

Market Sentiment Watch: Somewhat nervous looking market … with everyone asking if this is the near term top. My sense is that we are due for a pullback but that we will likely end the year higher than 1,250 on the S&P with $90 ish oil  but that’s just a hunch. 3Q earnings season is just about wrapped up save some small stragglers and non-Calendar reporters but the economic calendar for the week is fullish with a number of market moving data to be reported. China reports overnight hint at tightening but Japanese economic data were stronger than expected leading to a bounce in US futures early. This is the last week of the November equity options.

Ecodata Watch:

  • Retail sales of 1.2% vs a forecast of 0.7
  • Sales ex autos of 0.4% vs forecast of 0.4%
  • Empire State Index for November of -11.14 vs 15 forecast and last read of 15.7. Go figure.

Housekeeping Watch: Our new servers have arrived and running in test mode. We should have them live by the end of the week. Our old host has been gracious enough to keep this site active and we are looking to migrate seamlessly but you never know with these things so please bookmark the backup site just in case we suddenly wink out here.

The Week Ahead:

  • Monday 11/15: We get Inventories for September at 10 am EST, F = 0.9%
  • Tuesday 11/16: PPI (F = 0.8%, 0.1% core), Industrial production (F = 0.2%), Homebuilder’s index (F = 16)
  • Wednesday 11/17:  EIA Oil Inventory Report, CPI (F = 0.3%, 0.1% core), Housing starts (F = 600K)
  • Thursday 11/18: EIA Natural Storage Report, Jobless claims (F = 445K), leading indicators (F = 0.6%), Philly Fed (F = 5.0)
  • Friday 11/19: No ecodata release scheduled.
  • Saturday 11/20: November equity option expiry.

In Today’s Post:

  • Holdings Watch
  • Commodity  Watch
  • Stuff We Care About Today – Catalyst List Update, APC, VYOG
  • Odds & Ends

Holdings Watch:

ZCAT (Zman Catalyst portfolio):

  • $5,000
  • 99% Cash

ZIM (Zman Inefficient Markets portfolio)

  • $8,800
  • 34% Cash

ZLT (Zman Long Term portfolio)

Friday’s Trades – added more NOG (3rd piece there now, just about full), and a second trading position in KOG on weakness. I should be settling back into my not so tradey ZLT style this week.


NOG – Added another position in NOG common, for an average cost of $19.22. The stock came off following the 3Q results call after it tapped $22. This feels like enough is enough on the downside for them (off another 5% today), but if it falls further I may add a final piece to round out my position here.

KOG – Added a second trading position at $4.23. My sense is this will be a 3 to 6 month hold in addition to the Core position which is likely to be held longer.


Commodity  Watch:

Crude oil ended last week of 2% to close at $84.88, with all of the loss coming on Friday’s equity market pause. The 12 month crude strip trading at $86.73.  This morning crude is trading up $0.50.

  • IEA Watch: Demand seen higher. The Paris based energy group bump up their projection for global crude demand for 2010 by 200,000 bopd to arrive at a YoY increase of 400,000 bopd to 87.3 mm bopd. IEA points to further growth of 1.2 mm bopd in 2011 to 88.5 mm bopd.


Natural gas was flat on the week, ending at $3.94. We remain range bound. The 12 month strip is now trading at $4.11. This morning gas is trading up slightly on colder weather forecasts.


  • Tropics Watch: Something minor brewing southeast of Honduras, 20% probability of development.

Stuff We Care About Today

Catalyst List (yellow is updated)

Other Stuff

  • Tomorrow – The Large Cap E&P Orange Charts
  • APC/Tullow Oil Discovery Off Sierra Leone
    • Mercury well discovers 135 net feet of oil pay in two Cretacious fan systems.
    • APC operates the block with a 65% WI, Repsol and Tullow hold the remaining interests.
    • Light, sweet crude, with no water contact so there is potential to deepen or sidetrack for additional pay
    • This is their second discovery off Sierra Leone, the first being Venus announced in September 2009 and confirmed as having 45 net feet of pay in May 2010, capping a string of successes for an APC and partners off both costs of Africa (Ghana, Cote d’Ivoire, and Sierra Leone) in the last two years.
    • There may be an opportunity for a quick call trade in here today.
  • BEXP speaks at a Stephens conference on Wednesday. I had lunch with Stephens new E&P analyst several weeks back, smart guy, out of XTO management, will be interested to see if he can come with a Buy rating on the name or if it has run too sharply.
  • DSX Reports $0.42 vs $0.40 expected
    • Conference Call: Today, 9 am EST.
  • VYOG – the next Bakken wannabe announces it’s Niobrara non-operated position has yielded 2 apparent discoveries. A 650 bopd IP at one locations, a second located soon to be fracced and third well that was mentioned as having been drilled. They see costs coming in well below estimates which is a bit surprising this early in the program but they are drilling with private Slawson as operator so that makes some sense. This is unlikely to become the next NOG soon but it bears watching.


Odds & Ends

Analyst Watch:

  • NFX – Goldman ups target by $4 to $74
  • KWK – Goldman ups to Neutral
  • AREX – Keybanc reaffirms Buy rating
  • SD – Goldman cuts target a buck to $5
  • DVN – Jefferies raitses target $13 to $18, maintains Buy


  1. Mainsite is taking about 1 minute to refresh. I will monitor both sites today.

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