Two triple-digit gainers in 2 weeks — on this declining commodity?
Published via e-mail broadcast on November 3, 2009
In today’s TFN eNews:
* The coming oversupply crash
* Three gainers on this declining commodity
* When mergers are bad news
Dear TFN eNews reader,
Oil continues on its seasonal highs.
But prices are not demand-driven. Look as you may, and you won’t find a looming supply shortage — as predicted by the Peak Oil Theory for 1975, 1985, 1995, 2005, and just yesterday, respectively.
In fact, all the hens — exploration projects fueled by the top oil dollars of yesteryear — are coming home to roost.
Oil is plentiful. And so are distillates — thanks to the continuing slump of demand-driven manufacturing. Distillates by now are going straight into the tanks of floating vessels. Because they’re running out of storage tanks.
“Even if we had the mother of all winters, it will be very difficult to get rid of the current glut of distillate stocks, and this is likely to make the exit of winter very problematic,” says one oil and gas expert.
We’ve been harping on it that the same’s been going on with natural gas. The day the last terranean storage tank reaches capacity isn’t all that far away — and the world’s semi-retired liquid natural gas tanker fleet might be de-mothballed to serve as floating tanks.
Natural gas prices had cyclically bottomed in September at $2.50/Mcf. But for the rally to continue, the market needs a hefty decline in the monthly gas production. Barring a Siberian winter in North America, it looks like Americans can’t reasonably burn enough natural gas in the next couple of months to make a dent in supplies.
Which means that natural gas prices are precariously balanced at the abyss.
That’s good news for some… especially those who followed our TFN options guru Andrew Snyder. He says: “I knew the bottom was going to fall out, but I didn’t know it was going to happen this fast. Get this little factoid. Year-over-year gas rig counts have been down by over 50% for six months, yet onshore production is down by just 0.5%! It proves we’re getting too good at pumping natural gas from the ground. And now the industry is paying dearly.”
His TFN Strategic Trader members are well-positioned to squeeze profits out of this situation. Less than two weeks ago, Andrew clued them in on the impending downturn: “Last I looked, my three recommended plays were good for gains of 228%, 177% and 33%. Not bad for a week when most investors were looking for a pillow to cry into…”
(Re-read his report right here: http://www.todaysfinancialnews.com/TST/GAS/WTSTKA04.html)
*** The momentous 70th anniversary of Black Tuesday is now comfortably behind us.
Not that anyone cared or took notice: Those traders who move the markets are a hand-to-mouth bunch whose retrospective horizon typically ends at the ringing of the bell. But those of us who’ve studied wave theory and technical analysts are often tempted to look for anniversary dates as points to anchor our cycles on.
There may be some low points left for the year. I doubt we will see anything like the collapse we witnessed on Nov. 21, 2009. But for most of November and December, I see a gentle rise in the U.S. indexes.
If there’s one experience to take from last year’s market roller coaster, it’s that premature selling of temporarily depressed positions can come at a hefty price. And we have plenty of those in our portfolio right now.
But there are a number of bullish catalysts in the wings. There’s a slew of FDA approvals for new drugs and therapies coming up — which should do wonders for our biotech positions. China is continuing to plow its American wealth transfer into domestic consumption. That could add another 20-30% bubble to the Shanghai stock index.
And the orgy of reckless spending of the Pelosi-Reid-Franks Gang of Three will continue to erode the U.S. dollar and heat up commodity and precious metals buying.
Hopefully you’ve made good use of the discount buying opportunities of the past weeks. I think we’ll be profiting from the turn-around before the year is over!
*** Wall Street was alive with mergers and acquisitions today. But was it all good news? When shareholders trade nothing for nothing, is anybody getting anything?
Andrew writes: “Looks like the end of daylight savings time set the markets off by more than an hour. From the looks of things this morning, Wall Street slept in by over a day!
“Major merger and acquisition announcements are supposed to take place on Mondays, not Tuesdays. After all, what middle manager wants to clean out his desk with a full workday already under his belt?
“Thanks to word from Stanley Works (NYSE:SWK) and local Baltimore boy Black & Decker (NYSE:BDK), as many as 4,000 workers could be out of their jobs as the two companies unite under one corporate roof. While this merger may be good for the executives that created it, the move is filled with pessimistic signs for the overall economy.
“Besides eliminating thousands of good jobs and pushing even more Americans onto future unemployment rosters, the fact that this is an all-stock deal (cash was never an option according to inside reports) shows that both sides feel share price is overdone…”
What acquisition news was better for shareholders? Find out right here: http://www.todaysfinancialnews.com/investment-strategies/ma-tuesday-a-day-late-and-lots-of-dollars-short-10272.html
*** SPECIAL OFFER: Northeastern University’s Master of Science in Finance: Fully online, 16 months, AACSB accredited. Visit: http://onlinemsf.neu.edu/finance-online
*** Quote of the Day:
“There is no question that you can reduce the payments for medical care by having either a lower quantity or a lower quality of medical care. That has already been done in countries with government-run medical systems. In the United States, the government has already reduced payments for patients on Medicare and Medicaid, with the result that some doctors no longer accept new patients with Medicare or Medicaid. That has not reduced the cost of medical care. It has reduced the availability of medical care, just as buying a pint of milk reduces the payment below what a quart of milk would cost.”
– Thomas Sowell, Creators.com
Recommended Reading:
M&A Tuesday: A day late and lots of dollars short
Today’s Top 3 Financial News Stories:
WSJ.com – Stocks Slip; Banks Outweigh Buffett “Stocks were lower on Tuesday as a downgrade of semiconductor stocks and worries about the health of global banks offset Warren Buffett’s optimistic comments about the U.S. economy.”
MoneyNews.com — Report: Cash for Clunkers a Huge Waste “I think Cash for Clunkers clearly distorted the U.S. economic figures in an unsustainable way, according to The Business Insider, which cites a report from the Bureau of Economic Analysis that indicates GDP growth in the third quarter would have been 1.89 percent, not 3.5 percent as claimed, without government money.”
Bloomberg.com — Gold Trades Near Record as Indian Central Bank Buys From IMF “Gold traded within 0.5 percent of a record after India’s central bank bought 200 metric tons of the metal from the International Monetary Fund, heightening speculation about more official purchases.”
Cordially yours,
J. Christoph Amberger
Executive Publisher, TodaysFinancialNews.com
Next Article: Natural Gas Prices: “Stealth Buyer” tips his hand
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