Nat gas update: CHK

Chesapeake Energy Corp.

Thursday, June 3, 2 pm Eastern: 22.79

Thursday, June 10, close: 24.41

Gain: +7.11%

Candlestick analysis: "Buy Confirmed" today at 24.08 (American Bulls) 

Summary: Solid numbers up and down except for $12.3 billion in debt. Growth at 40.3% annually and revenue at $8.5 billion are encouraging. 

No Apples

Out of AAPL at 257.15 for a small little profit after entering at 255.30 on Friday. Lost out a bit; AAPL was up to 259.15 earlier, but I waited out another swing up and it wasn't going to happen. Lack of buyers, serious bulls. I broke even on the two trades held over the weekend. Back to 100% cash.

AAPL continued down to 256.86, but has rallied back up to 258. Market went from green to red and is now back in the green. Interesting. No lethal news out there right now. No great news either. We could be in a narrow range all day.

UNG hovering around 8.20, barely up for the day, but the majority of nat gas plays I'm watching are up modestly. GDP is up 5.45%, then its REXX up 2.59%. CHK is up 2.70% and WPRT is down -1.28%.

VXX is down 1.57% to 30.81 after running to 31.41 briefly.

Can't say this is any kind of bounce, but the bleeding has been stopped for the time being.

No gas here

Out of UNG at 8.02 for a very small loss. Not worth waiting this one out if the pullback in the Nat Gas sector continues from Friday's selloff. Most natty gassers are still up huge since Thursday afternoon when Obama pumped up clean energy. I'll be interested in the natty gassers at a lower level. For now, retreat mode.

AAPL back up over 258. Moved well during a generic report about WWDC and the new iPhone G4 on Bloomberg TV.

Futures still positive.

Now 77% cash.

[Update 2:28 am Hawaii: WPRT down to 16.81, but CHK up to 24.41.]

Photo: War & Game

Monday 1:46 am Hawaii

Well, well. Futures are up. Dow futures were -100 several hours ago, but are now green. Go figure.

Dow futures -1.00
NASDAQ futures +4.25
S&P futures +0.60

AAPL is trading above 258. UNG is barely above 8.00. That's a small paper profit on AAPL and a small paper loss in UNG here. I'm not going to wait around for the futures to transform into a gap up open. I'm out of both when premarket trading opens at 2 am. I'd like to get into WPRT or CHK at some point, no rush at all. Maybe even UNG again, at 7.50 if the pullback is that severe. The Nat Gas sector exploded on Thursday and Friday, so further selloff is within reason.

Breakfast: 6 oz of black coffee with a little bit of milk. Here we go, crazy market.

Natty gassers weekend party

If you're an employee at a natural gas company, things are finally looking up, even with the accident in Pennsylvania on Friday. There's no Chernobylish situation looming in nat gas from our current vantage point, unlike the deep-sea oil drillers.

Still, as much as natty gassers have moved up the charts in the past few days, they will succumb to the pressures of the global market. So, while I continue to delve underground to learn what I can about them, there's no point in taking on a morosely bearish market. When we get a bottom, nat gas will be a solid play, hoisted up by Obama's commitment to "clean energy."

On the surface, I like Westport Innovations (WPRT) because of its unique position in the industry. WPRT has zoomed up 17.29% to 17.23 since Obama's proclomation. Chesapeake Energy (CHK) is another solid play, but it's quite frothy here, too, up 12.86% to 24.09. Until I find a legitimate reason to venture elsewhere in Nat Gas country, there's no need to get cute and play one of the sub-5 issues.

Most-hated UNG (ETF) has held up better than any of the natty gassers I watched on Friday. Of the 39 on my list, only three finished positive for the day: UNG +2.12%, CLNE +1.15% and KWK +1.07%.

Since Obama's speech on Thursday, UNG is up 9.21% to 8.18. I have no hate for UNG. The climate in the past was not quite right to jump on board, but now that the president has pushed clean energy, there's plenty of upside for UNG and a lot of solid natty gassers ... though maybe not on Monday.

Why I'm feeling titillated today

Breakfast: Sugar-free Red Bull, 16-oz. Almost empty already.

Oil has long been a proxy of sorts for the market. When crude gets beaten down, the market usually follows like a shadow. When crude has a good day, the market is up. Opposite has been true of the dollar. And that's that.

Now, however, oil is down and nat gas is up in the teeth of a hater's market. Dow Jones is down 158, yet UNG is up 1.4%, WPRT is up 2.1%, CHK is up 2.1% and UPL is up 1.3%. Granted, nat gas was hammered in recent years and there is a reasonable argument to be made that the sector has been oversold. I look at the numbers, though, and see that just about all of these companies have underperformed — expectedly so in an anti-nat gas environment. Now that Obama has spoken the magic words — that the Fed will "embrace" clean energy like nat gas, it's a whole new world and these 15 and 19 and 7 percent gains in nat gas plays since Obama's speech at 2 pm Eastern on Wednesday ... may just be the beginning.

I'm not totally sold on nat gas. Apparently, there are serious byproduct issues and a groundswell of opposition. But nat gas is superior to coal at this point on balance, and certainly more golden than oil sands, which strip the environment and ecosystem. Whatever the case is, nat gas is the antidote to nasty crude oil swings, it appears.

Washington, D.C. in the house! Belfast, Ireland! Wow. Herndon, Va.!

Nat Gas is the safe play?

Oddly enough. CHK and UPL now up 2.2%, while UNG remains strong (+1.1%) and FCG has emerged with a 1.5% gain today. Even IEO (1.0%) and PXJ (1.0%) have gone into the green.

DIG and XTO are both down, however. Very interesting so far. May re-enter UNG or open a position in CHK. Cramer's tout, WPRT, is up 1.96% to 17.69.

AAPL showing strength (261.43).

Dow Jones is -159, NAS -25 and S&P -14.91.

Out of UNG

UNG got up to 8.08 for a split second and held above 8.04 while most of the market was in the red. The drift down to yesterday's closing price (8.01) simply not good. Better to get out at break-even than get twisted up by the tornado. I lost a penny/share with a tiny position. Break even. I'll take it in this bloodbath.

Other nat-gas plays are holding up nicely. CHK (25.03) is up 0.60% and UPL (53.09) is up 1.05%. The tell, as often is the case, is AAPL. Shares got up to 261.87, but topped off and are sliding again, now 260.75. Great buying pressure at the open below 260. I missed my chance to get those sub-260 shares, maybe.

Natty Gasser: CHK

Chesapeake Energy Corp. 
Key Statistics
Profit margin: 5.95%
Operating margin: 16.37%
Return on Assets: 2.90%
Return on Equity: 5.39%
Revenue: 8.50B
Quarterly Revenue Growth (yoy): 40.30%
Quarterly Earnings Growth (yoy): n/a
Total Cash: 516.00M
Total Debt: 12.30B
Shares Outstanding: 650.81M
Float: 646.55M
% held by Insiders: 0.43%
% held by Institutions: 72.20%
CEO: Aubrey McClendon, 2.9M
CFO: Marcus Rowland, 4.6M
COO: Steven Dixon, 4.6M
Executive VP: Douglas Jacobson, 4.4M
Consultant: J. Mark Lester, 2.0M
Candlestick analysis: "Hold" since buy on May 25 at 20.75 (American Bulls)

Nat Gas for Obama

Natural gas stocks are up since 2 pm Eastern Wednesday, when President Obama proclaimed the unofficial start to seriously developing "clean energy." It sounded like it, anyway. There's a lot of homework to be done here, but here's what I'm watching:

CHK (23.62): Chesapeake Energy, up 3.3% since Obama's speech, is a pure nat gas play (no oil) and is a favorite of Jim Cramer.

DIG (28.56): ProShares Ultra Oil & Gas, up 3.9%, "corresponds to twice the daily performance of the Dow Jones US Oil & Gas Index," according to the profile page on Yahoo.

FCG (16.90): First Trust ISE-Revere Natural Gas Index is up 3.7% and barely moves intraday. Average volume is 906k.

IEO (51.96): iShares Dow Jones US Oil & Gas Index is up 2.7%, but is another light trader (599k avg volume).

PXJ (14.68): PowerShares Dynamic Oil & Gas Services is up 2.3% and is the most thinly traded on this list (87k avg).

UNG (7.75): United States Natural Gas Fund is up 3.6%, taking new recent highs today with huge volume beginning at 10:31 am Eastern. Easily one of the most liquid on this list with average volume at 27.6 million shares per day.

UPL (50.78): Ultra Petroleum is up 3.1%, slightly better than CHK. Question is, what makes CHK a better stock and/or company?

XOP (41.77): SPDR S&P Oil & Gas Exploration & Production Select tracks the index of the (almost) same name. Shares are up 2.0%.

XTO Energy (43.35): Up 2.0%.

No feel for nat gas, but that may change with some homework. Some images about nat gas, and an interesting video of Harvard students questioning Chesapeake Energy CEO Aubrey McClendon.