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Back in Early June, I was getting a confusing sign...

2008-07-30T12:30:00.000-04:00

Back in Early June, I was getting a confusing signal from the oil markets. There was a diversion day, Oil stocks were down and Oil prices had just exploded.

The prior Thursday and Friday oil ran up over 16 a barrel, on those two days. I have looked back and there has never been a move in history of oil.

The confusing thing for me was that energy sector was one of the weakest during this run-up in its primary product (oil).

The good news for the oil companies was strong oil prices. But that turned out to be bad news for the stocks. (hind sight 20/20)

 ConocoPhillips was at $95 and now it's $81.95, a drop of 14%.
 BP was at $70.60, but is now just $61.50, a 13% decrease.
 Exxon Mobil was $89 and now is $81.70, a drop of 8%.

Many of the integrated report earnings this week, and most people are not expecting much good news. Many big oil companies are having a difficult time just keeping up with their current production levels.

Since their last earnings reports, most if not all analysts think they havent dropped their production numbers.

No new major production developments have taken place in the last few months, so there is doubt any of the companies will be able to speak of substantial increases in production, either. With stable output, these oil giants may start to look cheap.

We should also be aware that much of the drag on the integrated oil companies' results has been the high cost of crude in the refining process. Expect that those high will continue to drag on the refining side of the "integrated" oil process.

Another problem for earnings is the fact that with the $4 pump price for, demand has dropped. With high input price of oil and lower demand, I suspect that the numbers from refining will be a drag as well. Those are the negatives (crack spreads improved recently, see Valero: VLO)

I have been buying natural gas stocks lately. Natural gas prices have been crashing and the gas stocks are being hammered. I feel like they are getting hit too hard. They should be lower than when gas was strong, are being unduly punished. This morning, I opened a new position in DIG, COP, closed DUG and I bought back XTO and CHK today, so far so good.

UYG next stop 19 bucks nice E/E

2008-07-30T11:02:00.000-04:00

UYG next stop 19 bucks nice E/E

I be out of DIG at 100, and start scaling back int...

2008-07-30T10:57:00.000-04:00

I be out of DIG at 100, and start scaling back into DUG around then. Although this trade required patientce its worked.

WEZ,On your puts make sure you have a target. I us...

2008-07-30T10:50:00.000-04:00

WEZ,

On your puts make sure you have a target. I use the upper band of 22.68 if long UYG as a stop out. It hit 22.79 this morning and failed, I expect there to be one more push now that oil numbers are out of the way. Long SKF a close below 110 I am out.

Q, I hope you are right, I raised more cash just b...

2008-07-30T09:58:00.000-04:00

Q, I hope you are right, I raised more cash just because I have no idea where we go from here and want to see some clear trends develop, but I did buy a few UYG puts.

Re: (riddle me this - these 2 chains have survived...

2008-07-30T09:55:00.000-04:00

Re: (riddle me this - these 2 chains have survived for decades in bad times and good, but all government economic reports show things really aren't "that bad" so why would they shut down now.... hmmm... hmmm..... hmmmmMMmMmMmm)

I just got a great visual of Ted Knight aka Judge Smails saying this...

Went long DIG this am as I think the Oil and Gaz s...

2008-07-30T09:47:00.000-04:00

Went long DIG this am as I think the Oil and Gaz selloff way overblown. DUG failed to successfully get past 38 on 3 seperate occasions even with good volume. I think O&G exploration stocks are way over sold and if you look at the multiples of the iintegrated oils they are just way to cheap, COP is trading at an 8 multiple, a lot better than BOA or Citi, wating for bank sell off by 10am as all the late comers pile in and then get hammered by the hedgies (anyone say head fake)

Correction on UYG 22.68, not 23.68

2008-07-30T09:39:00.000-04:00

Correction on UYG 22.68, not 23.68

Watch out for 23.68 on the UYG, thats where it fai...

2008-07-30T09:34:00.000-04:00

Watch out for 23.68 on the UYG, thats where it failed last. We are almost there pre-open. Very Long SKF, this is a traders market IMHO and we all know the fundementals suk. Everyone knows housing is a mess, and banks and resturants are failing. We have the largest short interest since 1930's at this time. Cant get comfortable ie buy and hold in this enviornment cause mister market quickly takes away gains. I know first hand, was recently up 40% for the year in my SEP by the end of June. I gave 75% of it back in the recent pullback. Stick with what you are comfortable with, me I havent slept good in a while.

Yea, its crazy, listening to Kudlow this morning i...

2008-07-30T09:28:00.000-04:00

Yea, its crazy, listening to Kudlow this morning is raising the hair on the back of my short position neck.

I will be "drinking some kool-aid" for the next fe...

2008-07-30T09:23:00.000-04:00

I will be "drinking some kool-aid" for the next few weeks. UYG on sentiment. Keeping all natural resource stocks too,

this might hurt the shorters today :(http://www.fe...

2008-07-30T09:13:00.000-04:00

this might hurt the shorters today :(

http://www.federalreserve.gov/newsevents/press/monetary/20080730a.htm

* Extension of the Primary Dealer Credit Facility (PDCF) and the Term Securities Lending Facility (TSLF) through January 30, 2009.
* The introduction of auctions of options on $50 billion of draws on the TSLF.
* The introduction of 84-day Term Auction Facility (TAF) loans as a complement to 28-day TAF loans.
* An increase in the Federal Reserve’s swap line with the European Central Bank to $55 billion from $50 billion

If you cannot take a rally against your positions ...

2008-07-30T09:08:00.000-04:00

If you cannot take a rally against your positions for 2 weeks you probably will want to liquidate.

It is impossible to guess near term movements because they are all based on mood/sentiment. That has been swinging wildly day to day. Monday everything is terrible; Tuesday everything is great. There are no models for that.

Hi Mark,I like you, have one of my largest positio...

2008-07-30T08:49:00.000-04:00

Hi Mark,

I like you, have one of my largest positions SRS. My concern is short term. Not sure I have the patience to watch this market rally off no fundamentals for a week or two. Thoughts?