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Buzz Bits: Dow Creeps Up, Nasdaq Slips


Your daily Buzz & Banter highlights


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

Dirty Little Secret - Ryan Krueger - 3:28 PM

Just a follow up to a coal buzz from last week - The trade may be much less crowded than any in the sector, for those wondering about how much upside there could be from these levels. I love to slice and dice the S&P 500 every Monday, looking for my favorite clues despite the fact I own very few of its constituents since I am looking for un-crowded trades.

Today one number jumped off the page at me. On average, 22 Wall Street analysts are now following each Energy stock in the S&P 500. There is one dramatic exception at the very bottom with the fewest, at only five: Peabody Energy (BTU), one of the largest suppliers of coal to utilities. I spend a lot of time staring at oil on Wall Street but often overlook the fact that coal is mostly fueling the screens with those crude quotes. Over half of all electricity in this country comes from coal. Electricity in 1Q was annualizing at a 5% growth rate, a big number. That number has only been negative year over year one time in history that I am aware of. I suspect this trade will continue to attract new participants.

There is another group that I believe is the most un-crowded trade in energy, and I will share it soon as my humble entry to the Energy Wish List.

Position in BTU

Slow down, you move too fast. Gotta make this moment last... - Todd Harrison - 2:12 PM

It's quieter than a mouse fart as alotta folks evidently extended their weekend to focus on the important stuff. Those who are here (raise your hand) are finding a slow, slithery sift with a relatively benign tone. Let's call it a constructive drift, consistent with what we saw last week.

As I set to step into my 2pm in-house meld, I remain conscious that, while slow, there are several important levels that'll shape the near-term tape. There's S&P 1450, naturally, which is the obvious line in the sand. And there's BKX 113.50 (the 200-day) and GS $210 (resistance). Between the three of those, we should get good clues for the forward looking fuse.

I'm not making any huge bets, which is a good thing considering the money I've bled between my slightly negative bias and the recent premium decay. Still, while I'll be forthright in discussing my losses (that's where the lessons are), I wanna stay long gamma (options) and follow the contextual technical clues.

That's about it from where I sit, at least for now, as I keep one eye on the market and the other on these exciting behind the scenes Minyanville initiatives. I hope this finds you well, Minyans, and I'll hopefully be back before thy bell that tolls.


Position in spy

Everybody's Home - Jeff Macke - 11:58 AM

Howdy from NYC where, if I strain hard enough, I can actually hear the howls of my son 30 miles away and dealing with Baby's First Jet-lag (which is also the title of the all-time poorest selling Baby Einstein DVD). Judging by the malaise of the tape at the moment, Young Superfly and I aren't the only ones having a bit of a struggle getting back into the swing of things. No rest for the wicked and infantile, folks, here's what else I'm watching...
  • Kroger (KR) is actually trading higher after, as reported earlier on the Buzz, the company announced that it isn't interested in conducting a leveraged buyout. With all the money sloshing in the private equity bin these days, there are plenty of other folks who would be more than happy to consider "shareholder value" opportunities for them.

  • Is anyone else pondering the irony of folks piling into Burlington Northern (BNI) today, with the stock up over 5-pts, presumably because they "want to invest like Warren Buffett?" However he behaves in his real investing life, Buffett has spent his public life extolling the virtues of patient, opportunistic investing. Chasing a railroad stock is neither patient nor opportunistic.

  • With all due respect to Todd-O's "Long Entourage/ Short Sopranos" idea, the trade took a mark-to-market beating last night. No diss to Emanuel et al but there isn't a show on earth that can keep up with the Sopranos when the latter is hittin' as well as they were in the season's debut episode.

The Crude Concept - Adam Michael - 11:27 AM

It's been a while since I last updated my commitment of traders (COT) chart for crude so now that commercials are starting to push the net short side a bit, I thought it would be a good time to revisit.

Historically, the net commercial position in crude futures has inversely correlated to the price of crude. Commercials got max net long in January as crude made its lows near $50. Presently, the commercials' net short position has grown to just over 56k contracts. While the commercials have been as much as 80k contracts net short in 2005 and 2006, we are approaching a point (with the commercials net short position) where crude has historically had difficulty making much upside progress.

That doesn't mean we can't rally for a few more weeks, but we are nearing a point where we normally see some sort of pullback in the shoulder months before we head into summer (and the driving season).

Stocks that I like include:
  • BPZ Energy (BZP) – Peruvian oil play that also has significant natural gas reserve potential. I expect several catalysts in next 2-3 months regarding a couple more wells they are working on in their Corvina field.
  • The Exploration Company (TXCO) – Texas Oil Sands play that if it works is worth several multiple of the company's market cap. Also has significant natural gas potential in the Pearsall Shale (Where Anadarko (APC) and a private company financed by Jerry Jones, the owner of the Dallas Cowboys, are currently drilling)
  • Houston American Energy (HGO) – Has several working interests in Colombia based on indirect ownership in Hupecol. This is the most speculative name listed here so expect lots of volatility with this one.

Positions in BZP, TXCO, HGO

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No positions in stocks mentioned.

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