Rise and shine

8:13 am and I'm finally up here in the islands. Work beckons in less than an hour, so I'll try and add more natural gas updates. I only got through half or so of the 40 on my list, and that list will probably expand this weekend as I do more homework.

Quick note: the market is flat going into the final two hours, which is no surprise considering yesterday's low volume. Huge move, but it ran on thin ice and it would not shock me to see today's action crumble in the final hour. No reason for big money to commit over the weekend.

Big movers in nat gas today include Flotek (FTK 1.40 +2.9%) and Goodrich Petroleum (GDP 14.81 +4.6%). I really don't like the fundamentals of both, but daytraders are making a killing on both.

Petroleum Development Corp. (PETD) is also up nicely (24.56 +3.3%) and continues is status as one of the top gainers in natural gas since last week's staunch talk by President Obama. PETD's fundamentals aren't horrible — margins, returns and debt ($259 million) are negative but manageable, and it has $277 million in revenues. It's a 18.9 million share float that's key for traders. Stairs up, elevator down.

Westport Innovations Inc. (WPRT), which had some ugly days in the past week, is up huge today (17.62 +3.77%). WPRT is now up 20.7% since Obama's speech. Today's volume in WPRT is average so far and the candlestick is forming what I call an upside-down hammer — a negative indicator. We'll see what the final stretch brings.

Heavy metal: US Steel (X) is up 2.4% to 44.23. Freeport-McMoRan (FCX) is down 0.34% to 64.14. FXI is up by a hair (40.09 +0.12%). Can X sustain its gain?

Nat Gas update: FTK

Flotek Industries, Inc.

Thursday, June 3, 2 pm Eastern: 1.33

Thursday, June 10, close: 1.36

Gain: +2.26%

Candlestick analysis: "Buy If" (American Bulls)

Summary: One seriously ugly collection of fundamentals, which explains the share price. Negative margins, returns, growth (-59%) and $128 million in debt with just $6.5 million in cash. This is bad, though nothing takes the cake like BBI. 

Last wall of defensive offense

At some point, if the market keeps bottoming (Dow Jones -229, NAS -46, S&P -23), natty gassers will cave and give back enormous gains. Half of my tracking list remains green, but UNG has plunged from 8.22 to 8.11 in the past several minutes.

The mini-bubble could burst, which would make the sector a shorter's paradise, especially with the sub-5 issues like FTK, DPTR and HERO. Careful out there.

Just about the only real safe haven today has been (and probably will continue to be) VXX, which is up 6.4% to 30.24, off its intraday high of 30.48. FAZ is up 7.1% to 15.79, and inverse oil SCO is +6.2% to 16.07. TLT, grannie favorite TMF and TZA are also up nicely for bearish traders.

Careful riding with the VXXen!

Dow down 178, Nat Gas mostly green

Of the 39 nat gas stocks I began studying yesterday, 31 are in the green on an otherwise horrific morning. Sure, AAPL has battled back and is still trading above 260, but I didn't even filter out the natty gassers that were questionable or carried more oil in their inventory than I'd really like. But those 31 are still green.

REXX +6.2% to 11.91
KWK +5.5% to 12.80
GDP +5.6% to 14.77
HERO +4.8% to 3.06
ROSE +4.6% to 24.77

It goes on and on. I still prefer UNG for the time being, waiting for a better entry point as it trades near its intraday high (8.15). As an ETF, it will be more stable. However, some of these sub-5 natty gassers will probably have wicked swings for days or weeks to come. Really, do you think Obama will step to a podium and suddenly declare that clean energy does not include nat gas? Hell no.

FTK +4.0% to 1.54
MMR +3.8% to 10.64
RRC +3.1% to 52.64

A lot of these companies have frankly crappy fundamentals. I can accept that. The environment has been slanted against them politically until Obama finally uttered the word "embrace" regarding nat gas. But there are more than a few natty gassers that have HUGE debt and wildly overpaid executives (see yesterday's posts and charts). Those stocks will be the first to fall off the wagon in this run, though it could last for some time. It's like the gold rush and all those potential panhandlers breaking the speed limit (of 8 mph) to get from the Midwest to Californica. Yee haaw, brothers and sisters. Yee fucking haw.

I must overcome my natural tendency to duck and hide, and open a tiny position or two. Nat gas simply showing too much strength. We'll have a better idea by lunchtime — will the market manipulators take their profits and eat a big, fat pastrami sandwich for an hour? — and again by the close. If the market sells off like mad into the close, where will nat gas go? It could hold ground, or sell off in anticipation of another ride up next week. The MMs will play that game until your balls are broken. I'd rather play the game along with them than overpay and get caught holding the bag.

Bismarck, N.D., I see you!

Natty Gasser: FTK

Flotek Industries, Inc.

Key Statistics

Profit margin: -45.05%

Operating margin: -12.98%

Return on Assets: -4.42%

Return on Equity: -104.17%

Revenue: 112.55M

Quarterly Revenue Growth (yoy): -59.10%

Quarterly Earnings Growth (yoy): n/a

Total Cash: 6.49M

Total Debt: 128.34M

Shares Outstanding: 24.22M

Float: 23.21M

% held by Insiders: 6.13%

% held by Institutions: 24.00%

Executive VP: Steven Reeves, 381K

Candlestick analysis: "Hold" remains after a "Buy" at 1.38 on June 2 (American Bulls)