Weekly Update: April 30, 2014

| April 30, 2014

Weekly Update: April 30, 2014

 

Big Picture Outlook:

Janet Yellen and the Federal Reserve revealed another $10 billion of tapering in today’s FOMC meeting announcement.  That puts total monthly easing at $45 billion a month.

Not surprisingly, gold and oil are reacting poorly to the news.  WTI crude is down nearly $1.50 a barrel on the day while the yellow metal is down nearly $5 an ounce.

However, oil is also reacting to this morning’s EIA inventory report…

The government agency revealed 1.7 million barrels of crude were added to US storage for the week of April 25th.  The recent surge in crude storage additions has inventories sitting near all-time highs at 399.4 million barrels.

We may see a bit more downside to crude thanks to these bearish EIA numbers.  However, I don’t see the commodity falling far below $95 unless US economic data gets considerably worse.

Let’s get to today’s updates…

 

Portfolio Recap:

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

Yet another new 52-week high for ECA!  Shares of the Canadian oil and gas producer popped just over $23.75 in yesterday’s session.  That sent our July $19 calls to $4.60 per contract- a 196% gain from our entry.

Remember both our profit targets have triggered in this trade.  As a result, you should lock in profits on the majority of your position if you haven’t already. 

If you’re aggressive, consider holding the remainder of your calls for higher prices!

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

Another boring week for Barrick…

Shares of the gold producer have done nothing but chop around the $17.50 area since we last spoke.  Since our risk control line has triggered, only aggressive investors should be holding these calls for a rebound.

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

FCX is slowly working its way higher.  As a result, our $31 puts are losing value.  Remember, our risk control line was triggered a few weeks ago.  Only aggressive investors should consider holding for a potential downdraft in FCX.

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

AXAS is holding onto its recent gains quite well.  The small cap oiler traded around the $5.30 area for most of the past week.  As you know, the recent April rally sent our June $2.50 calls to a 160% gain. 

Given the current strength in the oil and gas industry, there’s likely more to come with the AXAS upswing.  So if you haven’t closed your entire AXAS position yet, consider holding these calls for higher prices.

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

COP jumped to another new 52-week high yesterday at $75.34.  The rally sent our May $67.50 calls up to an ask price of $7.25- a 277% gain from our entry.

Remember, both our profit targets have triggered in this trade.  If you’re aggressive, consider holding a portion of your remaining call contracts for higher prices.

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

BP surged above our second profit target at $50 yesterday!  As a result, our May $47 calls have jumped up to $3.55 a contract- a 255% gain from our entry!

Everyone should consider taking the majority of the profits on this trade to the bank.  But if you’re aggressive, you may want to hold part of your position until the May expiration.

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

The 600% gains we achieved in GDP are just silly…

Remember, we opened this trade on April 1st.  That means it took less than 20 trading days for us to achieve results that would make a hedge fund manager giddy with excitement.

You’d have to be crazy not to take the majority of your gains to the bank in this trade.  After all, both our profit targets have been achieved.

But since we have until June before our GDP contracts expire, aggressive investors may want to hang onto a few for even bigger gains!

. . . . Spectra Energy (SE) September 19, 2014 $39 Calls

SE briefly broke above $40 in today’s session.  The rally sent our $39 calls up to $1.75 a contract, which is a respectable 45% gain from our entry price. 

SE may have to chew on the $40 area for a few days before it finally breaks through to higher prices.  However, since we have plenty of time remaining until expiration, it shouldn’t be an issue.

Remember, our profit targets are at $42 and $44.  Keep holding for additional gains.

. . . . Cliffs Natural Resources (CLF) June 20, 2014 $17 Puts

CLF broke down to our first profit target at $17.50 after reporting mixed Q1 earnings results.  And even though the industrial metal miner is now trading at multi-month lows, there doesn’t seem to be much buying interest.

Since our first profit target has triggered, conservative investors may want to consider taking some gains to the bank. Unfortunately, our puts aren’t showing much in the way of gains yet (27%), so you may want to hold for additional downside in CLF.

. . . . PDC Energy (PDCE) June 20, 2014 $70 Calls

PDCE spent the past few days trading in a choppy technical range between $64.50 and $61.50.  However, the oil and gas explorer is closing near the top end of the range in today’s trading session.  As a result, we could see a technical breakout for PDCE in the very near future.

Remember, our profit targets are at $70 and $73.  Keep holding your PDCE $70 calls for a potential breakout!

. . . . PetroQuest Energy (PQ) July 16, 2014 $6 Calls

Yesterday’s trade is still sitting near our entry level.  If you haven’t already, you can buy these contracts up to $0.70.  If you’re already in, be patient and keep holding for higher prices.

Until next time,

Justin Bennett

***Editor’s Note***  Remember, if you’d like to tell me how you’re doing in the service, or if you have any questions or concerns, please feel free to drop me a line at [email protected]

 

Category: Commodity Trading

About the Author ()

Justin Bennett is the editor of Commodity ETF Alert, an investment advisory focused on profiting from the ebb and flow of important commodities via ETFs. The commodity veteran and options specialist is also a regular contributor to the Dynamic Wealth Report. Every week, Justin shares his thoughts with our readers on a variety of commodity-related topics. Justin is also a frequent contributor to Commodity Trading Research’s free daily e-letter. And he’s the editor of another highly successful and popular investment advisory, the Options Profit Pipeline.