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Buzz Bits: Dow, Nasdaq Close Higher


Your daily Buzz & Banter highlights...


Editor's Note: This is a small sample of the content available on the Buzz and Banter.

The Exploration Company Update - Adam Michael - 2:18 PM

The Exploration Company (TXCO) held its first earnings conference call today and I think we can say the market liked what it heard as the stock is currently up over 7%. Here are some of my notes from the call:

  • The Glen Rose porosity play is back on track after an engineering snafu that negatively affected production in 1Q. Production is back to where it should be and ramping.
  • The oil sands pilot wells are progressing as planned and the company should be at a point next year where they are producing 10,000 barrels of oil per day from a 320 acre pilot (32 wells on 10 acre spacing).
  • The company also mentioned the Statoil acquisition of North American Oil Sands for $2.2 Billion for an undeveloped oil sand play with similar characteristics. Obviously, the company believes that its current $375 Million market cap is too low.
  • The company also has begun development on a pilot project for a 6,000 acre heavy oil deposit (not to be confused with the oil sands) where they believe they can recover about 50% of the 100 Million barrels of oil in place. This is the first time the company has discussed this project which is a positive surprise.
  • The company is planning to spud a horizontal well targeting the Pearsall Shale sometime in late May or early June. Results hopefully by late 2Q/early 3Q.
  • The Fort Trinidad acreage acquired in the Output acquisition is right in the middle of where Encana, Anadarko, Chesapeake, and Devon are all drilling "Deep Bossier" wells. This is another big upside call option in the stock that the market has missed in my opinion.

Things look good at TXCO and it still remains one of my top two picks along with BPZ Energy (BZP).

Position in TXCO, BZP

Hitting the Wall - Jeff Macke - 12:24 PM

Greetings from The Wall which I seem to have hit about eight hours ahead of the scheduled end of my work week. Here's what I'm watching while waiting for my lunch order to spatula me back to the ground...

  • It was quite a Wrestling Geek thrill for me to follow through on my threat to get WWE CEO Linda McMahon's thoughts on the magnetic appeal of bald men (like her husband, post Wrestlemania). She was great and WWE continues to improve as a company, even without many Break-Out stars on the current roster.

  • Sears (SHLD) misses by a mile and the RTH moves slightly higher. Is it: A) Complacency? B) A sign that no one buys SHLD for retail? C) Evidence that next week's retail miss parade is already "In" the stocks? D) All of the above?

  • Buyout Mania reduces the market to a Lotto situation. Buying companies like NY Times (NYT) makes no real economic sense but, hey, the same coulda been said about Dow Jones (DJ) and look how well those shareholders are doing!

  • No advice but, for what it's worth, I'm liking Jones Soda (JSDA) here, now that the stock is back in the low 20's again. It's not cheap, it's still up big YTD and they aren't perfect, operationally. But the story remains intact and sometimes that's enough.

Don't Be a Sucker - Lance Lewis - 12:16 PM

Regarding the SPX's climb over the 1500 mark that has excited quite a few people over the last couple days:

The SPX is still down some 35 percent since its peak when priced in euros (see the chart here), which is the strongest fiat currency on the planet and quickly supplanting the dollar to a large extent. The SPX is down even more when I denominate the index in the only currency that is even stronger than the euro, gold.

As is the case with anything, if you depreciate the measuring stick enough, you can make anything appear like it's "up," but it's an illusion. If somebody offered to give you a can of Coke that is the size of a refrigerator (but only has four fluid ounces of cola in it) for the same price as a regular sized can of Coke with 12 fluid ounces of cola in it, are you getting a deal? Or are you being conned?

The answer is obvious. Don't be a sucker.

Mr. Currency Debasement may appear to be a friend to stocks at first. But Mr. Debasement eventually brings on a visit by Mr. Inflation too.

Mr. Inflation may also appear to be stocks' friend at first as long as the Fed allows him to run free, but eventually Mr. Inflation turns on stocks and crushes them by killing the bond market and cutting into consumer spending in a stagflationary environment.

Both Mr. Debasement and Mr. Inflation are, however, two of gold's very best friends and long-time allies.

Gold may appear to be tortoise at the moment and stocks the hare, but the tortoise wins the race. And that's also what the Dow/Gold ratio continues to show me too (see the chart here).

Position in gold shares

Got Symmetry? - Jeffrey Cooper - 9:09 AM

A weekly chart of the DJIA shows the index has satisfied a measured move. See the chart here. From the low of the breakout bar at 11,436 on the week ending Sep. 26, 2006 the DJIA moved up 1,393 points to the high of 12,829 on the week ending Feb. 16, 2007. From the reaction low of 11,927 on the week ending March 16, 2007 another move up of 1,393 points gives 13,320.

Thursday's intraday high on the DJIA -- 13,307.

Does this mean anything? Got me. Maybe. But nothing means much in manias. Although I do believe there will be some underlying symmetry that shows up when Hoofy and the Fat Lady meet.

In my experience there always is, although all too often, only in hindsight.

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