Water Skiing Behind Noah's Arc
By Kurt Kasun | May 19, 2008 | 12:29 PM | 2 Comments
I wrote a piece on here on Green Faucet last Thursday entitled, "Getting Aboard Noah's Arc with Commodity Trades," where I highlighted one of the many trading strategies I intend to use when my Global MegaTrends Portfolio becomes available to the public later this month. I am happy to report that Noah's Arc looked like a Carnival Cruise Line last week! I can't help but think of the line in the classic 1987 movie "Wall Street", when Bud Fox asked Gorkon Gekko "How many yachts can you water ski behind Mr. Gekko?" I can't answer that, but this is one ship worth getting behind!
Below, I have summarized the results and given my assessment of each's sector's short-term prospects going forward:
| Sector | Ticker | Stock | Entry Price | Stop | Last Trade | Percent Change |
| Gold | AEM | AGNICO EAGLE MINES | 66.05 | 62.7475 | 69.7 | 5.53% |
| 4.90% | KGC | KINROSS GOLD CP | 19.86 | 18.867 | 20.71 | 4.28% |
| Coal | ACI | ARCH COAL INC | 63.55 | 60.3725 | 64.82 | 2.00% |
| 5.73% | BTU | PEABODY ENERGY CORP | 72.22 | 68.609 | 79.05 | 9.46% |
| Nat Gas | DVN | DEVON ENERGY CP (OK) | 117.5 | 111.625 | 121.09 | 3.06% |
| 2.29% | RRC | RANGE RES CORP | 68.62 | 65.189 | 69.67 | 1.53% |
| Dry B. Ships | TBSI | TBSI INTERNATIONAL | 54.56 | 51.832 | 58.8 | 7.77% |
| 6.94% | DRYS | DRYSHIPS INC. | 104.19 | 98.9805 | 110.56 | 6.11% |
| Metals | TCK | TECK COMINCO CL B | 49.89 | 47.3955 | 51.74 | 3.71% |
| 4.13% | FCX | FREEPORT MCMORAN B | 119.04 | 113.088 | 124.45 | 4.54% |
| Refiners | FTO | FRONTIER OIL CP | 25.94 | 24.643 | 26.26 | 1.23% |
| 1.00% | TSO | TESORO CORP | 24.76 | 23.522 | 24.95 | 0.77% |
| Oil Service | CAM | CAMERON INTL CP | 52.47 | 49.8465 | 55.7 | 6.16% |
| 5.96% | RIG | TRANSOCEAN INC | 151.29 | 143.7255 | 160 | 5.76% |
| TOTAL | 4.42% |
| Sector | Sector Commentary | Intra-Sector Commentary | What To Look For |
| Gold | A flurry of negative economic reports has stalled the US dollar rally and the price of gold is up sharply this week, over $35 oz. over the last two days; higher price of oil also supports stronger gold | AEM and KGC are have been nice performers with both outperforming the HUI and XAU indices | Resistance-level around $910; this could mark the top for our gold stocks over this one-two week period; both KGC abd AEM have moved through short term resistance levels |
| Coal | Sector rallied sharply this week largely on the comments of Dalman Rose and FBR analysts upgrading the sector | BTU was one of the sectors better performers while ACI was a laggard; ANR and CNX received a nice boune today after FBR analyst appeared on Bloomberg | Coal stocks are almost all at their all-time highs; minus further bullish analyst comments expect a 10% pullback soon; expect some analyst to push ACI to join the party next week (Cramer doesn't count) |
| Nat Gas | This week was largely neutral for the price of nat gas after it has pulled back over the last couple of days after the release of nat gas inventory builds yesterday | DVN and RRC both are performing in line with other Nat gas names CHK and NFX; I would have thought RRC might have ralllied a little more sharply on the strong buy analyst initiation of coverage earlier today | Not much on the radar for nat gas; another bearish EIA report next Thursday could take price down to the $10 range; nice 2%+ rallies in nat gas stocks with price of nat gas down 2% today could be bullish for next week |
| Dry B. Ships | This sector is on fire and almost everyone knows it. Commentary from Bloomberg earlier in the week revealed that the credit crunch could cut back an expected increase in the supply of ships by as much as 25% | DRYS and TBSI are performing silghtly better than this group which you can almost throw a dart at | The Dry Bulk Shipping Index Just took out the old November high with relative ease; look for a rally in the shipping stocks to at least their old highs; continue to monitor dry bulk rates |
| Metals | Nambian zinc strike and mines taken off line in China due to the earthquake have heightened supply concerns giving an across-the-board bid to metals prices for the week | TCK and FCX have performed largely in line with the rest of the sector; several large institutions revealed significant "buys" in FCX in recent 13F filings | Other than the announced expected 9.5% stake China is expected to take in BHP Biliton not much news expected; anticipate metals stocks to continue their stealth climb to new high; FCX and TCK should both rally as copper moves to challenge the $4 level |
| Refiners | This group is the clear underperformer of the group; the "crack spread" -- the difference between the price of oil and the price of unleaded gas continues to weaken, not favoring the refiners margins as the price of oil continue to increase | TSO and FTO have performed in line with the two other prominent refiners--HOC and VLO | Expect the "crack spread" to favor refiners (finally!) beginning next week when traders begin to factor in higher unleaded gasoline prices which will increase the margin for refiners; both TSO and FTO are still 50% off of their 52-week highs with room to run |
| Oil Service | Oil service stocks began to rally mid-week after a UBS upgrade of the sector and a Bloomberg article which revealed that Petrobras threatens to take more rigs off the market to develop their new discovery off the coast of Brazil; Goldman Sachs increased forecast of WTI ($141) for 2H08 didn't hurt | CAM and RIG are both outperforming the Oil Services ETF OIH | Expect more analyst to jump on the bandwagon for the oil service sector over the next week--these stocks are still under their highs; CAM could really jump after a delayed Barrons bounced with appears to finally be materializing |
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