Weekly Update: April 2, 2014

Weekly Update:  April 2, 2014

 

Big Picture Outlook:

Today’s EIA oil inventory report revealed a 2.4 million barrel draw from US storage facilities.  That’s a bullish number since last week’s report revealed a gigantic 6.6 million barrel build.  The sudden reversal is partly due to weaker imports and a slight pick-up in refining capacity.

Oil held steady on the report, trading around the $99.50 area on the May contract.  However, oil explorers ramped up nicely in today’s session.  Investors are likely interpreting today’s EIA report as a mid-term bullish signal for the oil exploration industry.

As far as gold and silver go…

Both metals put in solid gains today after a hefty multi-week slide.  Gold is trading a $1,290 while silver is crossing the tape at $19.98.  As you may know, these are important technical support areas.  It will be very interesting to see if buyers step in to push precious metals back to the upside.

Let’s get to our open positions…

 

Portfolio Recap:

. . . . Encana (ECA) July 18, 2014 $19.00 Calls

ECA set a new 52-week high in recent trading.  As a matter of fact, shares shot to $21.60 in Monday’s session.  The recent rally sent our $19 calls up to $2.87 per contract- an 85% gain from our entry price of $1.55.

Now, since this stock has had quite a bullish run, we may see a bit of profit taking at these levels.  But since our calls expire in July, we have plenty of time for ECA to recover and hit our second profit target of $22.

Remember, our first target at $21 has already been hit.  So if you’re on the conservative side, you may want to take your profits to the bank now.

. . . . Oasis Petroleum (OAS) April 17, 2014 $45.00 Calls

OAS is finally showing signs of life! 

Shares are surging to multi-week highs near $43.00 in today’s session.  As you know, OAS hit our first risk control line at $40.90.  As a result, you may already be out of this trade.

But if you decided to hang in there, keep holding the OAS calls for higher prices.  Today’s bounce may be the start of the bullish move we were looking for!

. . . . Barrick Gold (ABX) May 16, 2014 $21.00 Calls

Thanks to the bounce in gold, ABX is back on the upswing today.  Shares of the gold miner are up nearly 4.5% as I write. 

Now, I realize ABX hit our risk control line at $17.90 last week.  So you may have decided to cut this one out of the portfolio… and that’s fine.  Risk control is a very important part of being a successful trader.

However, if you decided to stick with this trade, go ahead and keep holding it for higher prices. Today’s gold bounce may be the start of something more significant.

. . . . Freeport McMoran (FCX) May 16, 2014 $31.00 Puts

Unfortunately, FCX is rallying due to the recovery in copper prices.  As you may know, the red metal is trading at $3.04 a pound, which is back above the highly important $3.00 level.

FCX is hitting our risk control line of $33.50 in today’s session.  As a result, conservative investors should consider closing this trade to conserve capital.  If you’re more aggressive, consider holding these FCX puts for another potential downswing in copper.

. . . . Abraxas Petroleum (AXAS) June 20, 2014 $2.50 Calls

AXAS has cooled a bit since we last spoke.  Shares are consolidating the mid-March surge near the $4.00 area.  We may see a few more days of this weak action, but all signs point to even higher prices for AXAS by June.

Keep holding for higher prices!

. . . . Conoco Phillips (COP) May 16, 2014 $67.50 Calls

COP hit our first profit target at $70 last Friday.  And after a brief bit of selling on Monday, the stock is back on the move higher today.  Our calls ran to a high of $3.87 on Friday- that’s up 101% from our $1.92 entry price a few weeks ago!

If you’re a conservative investor, you may want to take some gains off the table.  If you’re more aggressive, leave these COP calls open for further gains!

. . . . BP Amoco (BP) May 16, 2014 $47.00 Calls

BP hit our first profit target of $48.50 in today’s trading. As a result, our May $47 calls are trading at $2.00- that’s up 100% from our entry price of $1.00!  If you’re a conservative investor, consider taking a profit at these levels.  If you’re more aggressive, keep holding BP for higher prices.

. . . . Goodrich Petroleum (GDP) June 20, 2014 $17.50 Calls

Yesterday’s trade in GDP is starting off perfectly.  Shares of the oil explorer are up 6.3% as I write.  Today’s rally has our calls trading at $2.00- a 48% gain in less than 24 hours!

This trade is just getting started so keep holding these calls for higher prices!

 

Category: Commodity Trading