Nat Gas update: Short-term tipping point?

What goes up must come down unless it's March of 2009 or pre-Internet bubble bursting time. Bull runs can outlast even the most extravagant projections of uber-bulls and squash the testicles of the biggest bears. But last year's run was powered by the Fed stimulus program, among other free-now-but-punishing-to-all-later maneuvers.

For now, it's time to look at my Nat Gas 40. It's fun to see their gains, even if I have not a single position in any. Besides, things are just frothy enough here in the 12 days since Obama's clean energy speech (and his anti-BP chatter today) to possibly mark a short-term top in one of the hottest sectors.

These 40 natty gassers include today's closing price and the gain since Obama's speech 12 days ago, and the candlestick chart analysis. Interesting that the only two that got "Sell Confirmed" status today are among my least favorite issues. 

My Favorite 5:
CLNE 18.17 (+22.39%) — "Buy If" (American Bulls)
HGT 21.59 (+11.29%) — "Sell If" (American Bulls)
PSE 25.15 (+4.44%) — "Sell If" (American Bulls)
SWN 44.99 (+13.04%) — "Sell If" (American Bulls)
WPRT 19.42 (+32.2%) — "Hold" (American Bulls)

Natty Gassers I like, though they lack strong balance sheets:
BEXP 18.96 (+9.23%) — "Hold" (American Bulls)
CHK 25.36 (+11.28%) — "Sell If" (American Bulls)
DIG (etf) 31.13 (+13.49%) — "Hold" (American Bulls)
FCG (etf) 18.05 (+10.80%) — "Hold" (American Bulls)
FST 32.19 (+18.26%) — "Hold" (American Bulls)
HK 21.67 (+16.63%) — "Hold" (American Bulls)
KOG 3.62 (+13.48%) — "Hold" (American Bulls)
KWK 13.81 (+23.3%) — "Hold" (American Bulls)
MMR 11.99 (+16.52%) — "Hold" (American Bulls)
NBL 66.45 (+12.51%) — "Hold" (American Bulls)
NFX 57.05 (+14.21%) — "Hold" (American Bulls)
NGS 17.25 (+12.09%) — "Hold" (American Bulls)
PETD 26.60 (+27.7%) — "Sell If" (American Bulls)
PQ 7.96 (+27.97%) — "Hold" (American Bulls)
PVA 24.78 (+13.36%) — "Sell If" (American Bulls)
PXJ 15.93 (+11.01%) — "Hold" (American Bulls)
REXX 11.97 (+15.88%) — "Hold" (American Bulls)
ROSE 26.21 (+19.9%) — "Hold" (American Bulls)
STR 49.88 (+13.16%) — "Sell If" (American Bulls)
TLM 17.78 (+5.52%) — "Buy If" (American Bulls)
UNG (etf) 8.83 (+17.89%) — "Hold" (American Bulls)
UPL 50.04 (+1.73%) — "Buy If" (American Bulls)
XOP 44.15 (+8%) — "Hold" (American Bulls)

Several of these natty gassers are hot, but fundamentally are mediocre:
BRNC 4.00 (+14.94%) — "Hold" (American Bulls)
COG 38.41 (+11.24%) — "Sell If" (American Bulls)
CRK 33.53 (+15.34%) — "Sell If" (American Bulls)
CRZO 20.24 (16.66%) — "Hold" (American Bulls)
DPTR 1.16 (+2.65%) — "Sell Confirmed" (American Bulls)
FTK 1.44 (+8.27%) — "Sell If" (American Bulls)
GDP 15.29 (27.1%) — "Hold" (American Bulls)
HERO 3.19 (+23.17%) — "Buy Confirmed" (American Bulls)
IEO 55.20 (+9.13%) — "Sell If" (American Bulls)
RRC 50.83 (+8.63%) — "Hold" (American Bulls)
VNR 22.46 (+5.74) — "Sell If" (American Bulls)
XCO 18.88 (+8.07%) — "Hold" (American Bulls)
XTO 44.23 (+4.44%) — "Wait" (American Bulls)

Of the Nat Gas 40, only one was a "Buy Confirmed" today. Just three are on "Buy If" status.

On a neutral front, 22 are on "Hold" and only one is a "Wait".

12 are "Sell If" status and one was "Sell Confirmed" today.

Today may have been the tipping point for the sector in the near term. For short-term traders, it's time to start scaling out a bit. For long-term nat gas believers, no need to get out yet barring a broad market puke party. There's a nice climb ahead as long as A) Obama continues preaching to the choir of energy worriers and B) we have live video of Mother Earth's blood spewing out of the Gulf.

Stampede Tuesday

Dow Jones 10,404.77 +213.88 (+2.1%)
NASDAQ 2,305.88 +61.92 (+2.76%)
S&P 500 1,115.23 +25.60 (+2.35%)

Huge move today, and though volume is still tepid, it was bigger than yesterday. I'm not a believer in this rally, but there's no point to fighting momentum. Didn't the spring rally continue for months despite lame volume? There's money to be made in both directions.

ENERGY
Nat Gas extremely impressive today, even as BP rallied in the afternoon. Of the 40 natty gassers on my list, 39 finished positive. They averaged a 3.59% gain today, absolutely, undeniably hot. As a group, they have moved up 13.97% since Obama's clean energy speech 12 days ago.

WPRT (19.42), one of my five favorites, moved up 2.29% today — a bit soft compared to the sector — but is now up 32.2% since Obama's talk. Insanely bullish.

GDP (15.29) is up 27.1% during this span, including 4.01% today. KWK (13.81) is up 23.3% since Obama and HERO (3.19) is up 23.17%, including 13.12% today alone. Small floats and daytrading frenzy are factors here, which is why I'll try WPRT rather than HERO.

CLNE (18.17) is up 6.97% today and 22.39% since Obama. WPRT and CLNE are solid fundamentally and both are pure clean energy plays. Another reason to like.

UNG feels safe, but the move from 8 flat to 8.83 in the past week is amazing. UNG now up 17.89% since Obama, including 3.27% today.

BP gained 2.38% to 31.40 and USO is up 2.62% to 35.23. USO down to 34.66 in afterhours trading. SCO, the inverse oil ETN, dropped 4.62% as crude prices rose to $76/barrel.

IPO
CBOE is trading at 32.56 in afterhours, looking like the hottest initial public offering of the year. If Goldman Sachs is propping up the market to support the four IPOs it is unveiling this week, be careful once the propping is done. CBOE's 14% gain is great for the big boys, and they'll cash in while the rest of us think we're walking into a winner.

FINNIES
Speaking of GS, it gained 2.59% to 136.90. That made yesterday's buyers at 133-134 quite happy. C gained 2.84% to 3.99, and Euro banks also gained. STD (11.19 7.08%) has made a great move up since dropping below 10. IRE is up 6.42% to 4.31 and NBG is up 3.29% to 2.51.

FAS tore up 6.88% to 24.04. I still don't trust financials, but the volatility and high-percentage moves are making some fast money for fast traders. I wouldn't short finnies here, either. FAZ lost 6.74% to 14.27. There are numerous stories of an ominous future for finnies. They're not all fiction, no doubt, but as irrational exuberance returns to the market, traders don't care about tomorrow. They're banking on finnies and wild momo swings led by the high-frequency robots.

EURO
FXE (123.07) up almost 1% today while the dollar (UUP) dropped. FXI gained 2.29% to 41.03. Everything's headline-driven. Not my cup of tea, but watching these as indicators.

HEAVY METAL
FCX gained 2.74% to 67.05 and US Steel (X) rose 3.03% to 45.91. Wow. As China goes, so go copper and steel. SLV gained 1.85% to 18.19 for good measure.

NEW TECH
My favorite company, Apple, continues to rebound from last week's plunge to 242. AAPL closed near its high at 259.69, a gain of 2.13%. GOOG rose 3.06% to 497.99. I liked GOOG below 490, but didn't touch it.

NFLX, a wild gainer recently, pared back 2.61% to 123.50.

SAFE PLAYS
GLD climbed 1.16% to 120.99 and TLT dropped 0.41% to 96.51. A massive bull rally and TLT dropped fractionally. That's weird. Probably says something about the cautious nature of retail traders. Nobody wants to get burned by another Flash Crash or any kind of crash.

Can this rally run for two, three months like the previous run? Probably not. A lot of short leashes out there. Fear reigns, even in the bulls. But the shorts are clearly getting hammered lately.

Nat Gas

It's the mother lode. I'm not talking about the "volcano" BP unleashed in the Gulf. Natural Gas stocks are exploding today. My list of 40 are up a combined 2.45% and as a group they're now up more than 12% since Obama's clean energy talk nearly two weeks ago. This might be the best single-day gain (so far) I've seen with 39 of the 40 on my list in the green.

HERO is up more than 10%, CLNE, BRNC and KOG are up more than 5%. REXX and NGS up more than 4%. CLNE (Clean Energy) has gotten some nice pub on TV lately. I missed the boat on this move. Much as I like a few in this sector, I didn't take the ride even though nat gas is one of the few plays with some semblance of an edge in this environment.

The Notorious U.N.G. is up 1.6% to 8.69. Wow. Even Finerman on Fast Money said yesterday she opened a position.

Interesting that BP is actually up from its intraday low, trading at 31.90 (+4%).

Nat Gas update: HERO

Hercules Offshore, Inc. 

Thursday, June 3, 2 pm Eastern: 2.59

Thursday, June 10, close: 2.77

Gain: +6.95%

Candlestick analysis: "Wait" (American Bulls)

Summary: There's nothing special fundamentally here. Margins and returns were negative in the past year, while growth was -32%. Revs were $670 million, cash $130 million and debt $872 million. Interesting that a virtual penny stock pays its CEO $1.04 million a year. 

Thunderous Thursday

Dow Jones 10,172.53 +273.28 +2.76%
NASDAQ 2,218.71 +59.86 +2.77%
S&P 500 +31.15 +2.95%

Signs of hope, as opposed to the apocalypse, prevailed today. Much as the thunder was more crackly and monotone rather than bone-rattling and spooky — volume was inept overall —it was still a winsome day for bulls.

> FXE (Euro) finished at 121.05 (+1.28%), giving bulls a long leash to go and play. In turn, UUP (Dollar) was down 1.05% to 25.38.

> Copper king FCX was up again, a whopping 5.94% to 64.36, and X (US Steel) rose 4.48% to 43.19. Key moves that indicate demand is up, and judging by another positive day for FXI (40.04 +2.42%), downward momentum has been stalled. Maybe reversed.

> Rotation is in play, apparently, as GLD (119.08 -1.31%) and TLT (96.19 -1.79%) retreated again. A majority of traders and investors in gold aren't going to make round trips to and from stocks, but the ones who do are traveling in relative safety. Road bandits were nowhere to be seen today.

> Energy rose to the rafters. Oil had been trading up even with BP deep underwater, pun intended. But BP finally bounced off its lowest share price in 13 years and finished at 32.78 (+12.26%). That killed inverse oil ETNs like SCO (-4.77%) and DTO (-5.00%). Nimble traders who owned BP through this catastrophe wisely scooped up SCO and/or DTO as insurance and escaped disaster.

> More energy: Natural gas continued its climb after a short pullback. In the week since Obama raved* about clean energy, most of the 40 natty gassers on my list are up significantly. Earlier today, all 40 were in the green. The strong finish made this a 40-for-40 day in the natty gassers. I doubt this will ever happen again.

One strange phenomenon was that UNG was often among the nat gas leaders when the market had pullbacks in the past five sessions. The much despised vehicle has reverted back to its former self while almost all natty gassers rocket higher. UNG gained a measly 0.13% (7.99). The other 39 gained at least 1.29% and as much as 9.67% (CRZO). The top 10 nat gas plays today were CRZO (19.74), DIG (29.41 +9.53%), BEXP (17.78 +8.22%), PETD (23.78 +8.2%), ROSE (24.87 +7.38%), NGS (16.07 +7.28%), KWK (13.12 +7.19%), HERO (2.77 +6.95%), PXJ (15.25 +6.64%) and COG (36.36 +6.38%).

> Financials had their day, too, more on the Eurozone side than here. STD launched 10.23% (9.90) after dipping below 9 yesterday. IRE gained 8.59% (3.92) and NBG lifted 2.24% (2.28). FAS had another knockout performance (22.60 +9.5%).

It wasn't a perfect day. Lack of volume plus lack of leadership by GS, which was down 2.21% (133.77). GS traded as low as 131.30 and as high as 137.77. C wasn't much to cheer about either with gain of 0.78% (3.90). C has usually been a productive vehicle with an entry point below 3.60, but turns into a pumpkin often enough at this level. It might have enough legs to reach 4.10, but would be it, normally.

FXY (Yen) closed down 0.14% to 108.51, and that released some of the pressure on the market.

So many moving parts and one breakdown could put the engine out of whack again. Until then, souped up plays like BIDU (72.63 +7.76%) and NFLX (118.66 +2.8%) will work.

In spite of the lack of perfection, AAPL was impressive. After selling down to 242-plus, shares ran up to 250.51 by the close, near its high of the day (+3%). GOOG also finished well at 498.01 (+2.74%).

They both traded below average volume. So maybe they gain volume tomorrow, inflows increase back to the market and we can put our rose-tinted glasses on again. Or the lack of conviction turns the market back into a race for the exits tomorrow (or next week) when momentum shifts.

I'm still paranoid. All this information is nice. Charts are cool. But the guessing game is not that fun and traders who stepped away and went on vacation for the past few weeks are mostly doing as well or better than most of us who have stayed close to the action. Going long AAPL, for example, wasn't a serious consideration this morning, so I spent most of the day sleeping like most people in my time zone.

I imagine there are a lot of Apple/AAPL fans out there who are wary of stepping into the water again, especially when volume is unlikely to match rallies of February-April of this year, or 2009.

Enjoy the bounce!

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: HERO

Hercules Offshore, Inc.

Key Statistics

Profit margin: -15.33%

Operating margin: -14.13%

Return on Assets: -2.46%

Return on Equity: -10.76%

Revenue: 670.21M

Quarterly Revenue Growth (yoy): -32.50%

Quarterly Earnings Growth (yoy): n/a

Total Cash: 130.80M

Total Debt: 872.09M

Shares Outstanding: 114.76M

Float: 112.85M

% held by Insiders: 3.41%

% held by Institutions: 76.10%

CEO: John Rynd, 1.04M

Candlestick analysis: "Buy-If" (American Bulls)