Weekly Update: July 2, 2014

| July 2, 2014

Weekly Update: July 2, 2014

 

Big Picture Outlook:

WTI crude is falling back below $105 a barrel today as investors factor in today’s EIA inventory report. In case you’re unaware, crude stocks for the week of June 27 fell by 3.2 million barrels.

While the inventory news has a bullish tone to it, investors are more concerned about the glut of oil sitting on the Texas gulf coast.

As you may remember, a pipeline connecting Cushing, Oklahoma and the Texas coast was started earlier this year. Thanks to this line, US crude inventories are piling up in this important refining hub. Even with refiners running at 90% capacity last week, they’re having a hard time chewing through all the inventory.

What’s it mean for crude prices?

Unless we see another blow up in the Middle East, we may see WTI bleed lower over the next few weeks.

As far as precious metals go…

Gold and silver are holding onto their recent gains nicely. The simple fact these metals aren’t succumbing to profit taking is a very bullish sign.

Unless we see economic data suggesting US inflation levels are cooling after the run up in May, precious metals will likely keep a bullish tone.

On a lighter note, I’d like to wish you a happy and safe July 4th holiday!

Now, let’s get to our open position updates…

 

Portfolio Recap:

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

ECA turned lower over the past week. With shares currently trading at the $23.50 area, we may have seen the biggest gains for our July $19 calls.

Remember, we only have two more weeks until expiration in this trade. And since both our profit targets have already triggered, any gains you get from here on out are just gravy.

If you’re up to it, keep holding your ECA calls for a few more days.

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

SE jumped to $42.70 in yesterday’s session- yet another new 52-week high. The rally sent our calls trading up to $3.60 a contract- a gain of 200% from our entry.

Remember, our first profit target at $42 has already triggered. So if you’re a conservative investor, be sure to take some profits off the table.

Just keep in mind that we still have plenty of time until expiration. Aggressive traders may want to hold these calls for our second profit target at $44.

. . . . PetroQuest Energy (PQ) July 18, 2014 $6 Calls

PQ came within 20 cents of our second profit target at $8 on Monday. The early week rally sent our $6 calls up to $1.60 a contract- a 166% gain from our entry!

Remember, PQ already hit our first profit target at $7. As a result, only aggressive investors should consider holding these calls for further upside.

. . . . Boardwalk Pipeline Partners (BWP) Sept. 19, 2014 $16 Calls

BWP perked up a bit since we last spoke. The pipeline operator jumped to $19 a share last Friday. That rally sent our $16 calls up to a $3.30 bid, which is a 100% gain from our entry!

While BWP has yet to hit our first profit target at $20, a 100% gain is nothing to shake a stick at. So I don’t blame you if you took some profits off the table in this trade.

Just remember, we have plenty of time until expiration, so our $20 and $24 targets are still likely.

. . . . Petroleo Brasileiro (PBR) July 18, 2014 $16 Calls

PBR isn’t acting well right now. The Brazilian oil explorer hasn’t recovered from last week’s vicious selloff. We’ll need a rally to $16.52 ($16 strike + $0.52 premium paid) by July 18th to get our calls back to breakeven.

Even though our risk control line at $13.50 has yet to trigger in PBR, our calls have lost much of their value. As a result, it’s probably in your best interests to just hold these calls through to expiration.

Who knows, we may just get the rally we need!

. . . . Cabot Oil & Gas (COG) July 18, 2014 $37.50 Calls

After trading at $34 for the past week, COG is getting a nice bullish push today. However, we’ll need a strong rally to $38.55 ($37.50 strike + $1.05 premium paid) by July 18th to get this trade firmly in the green.

It may seem unlikely that COG can reach that level in such a short time. But look at a chart and you’ll find COG is capable of putting together quick and lengthy rallies!

Remember, our risk control line triggered in this trade a few weeks ago. That means only aggressive traders should be holding these calls for a rebound.

. . . . Halcon Resources (HK) October 17, 2014 $7 Calls

HK is turning into a very nice trade. The small cap oil explorer is flirting with $7.50 a share (our first profit target) in today’s session. That has our October $7 calls trading at a $0.95 bid- a 72% gain from our entry.

If HK crosses $7.50, conservative investors may want to take some profits off the table.

However, with an October expiration, we have plenty of time to see this trade through. That’s why aggressive investors may want to keep holding these calls for higher prices. Our second profit is at $10.00.

. . . . Triangle Petroleum (TPLM) October 17, 2014 $10 Calls

TPLM hasn’t budged since hitting our first profit target at $12 last week. However, much of the exploration industry is experiencing the same ambivalent price action over the past week.

Let’s be patient and see if TPLM can get to our second profit target at $14 by October.

. . . . CenterPoint Energy (CNP) August 15, 2014 $25 Calls

CNP went on a nice little run to the $25.75 area on Monday. That rally sent our $25 calls up to $1.20 per contract- a 100% gain from our entry at $0.60.

If you went ahead and took some profits off the table at that point, I don’t blame you. A 100% gain in a matter of two weeks is nothing to take lightly!

Of course, CNP has yet to trigger our profit targets at $28 and $35. So if you’re still holding for higher prices, that’s fine too!

Either way, keep holding your remaining call contracts for much higher prices in CNP!

. . . . Hecla Mining (HL) September 19, 2014 $3.50 Calls

HL is trading at an extremely important level right now. If the silver miner can surpass technical resistance at $3.50 on heavy volume, our September calls will start gaining value quickly.

Keep holding these calls for higher prices! Our profit targets are $4 and $5.50.

. . . . Pan American Silver (PAAS) October 17, 2014 $16 Calls

Much like HL, PAAS is also trading near an important technical resistance level. The area we need to watch in PAAS is $15.50. If the miner can surpass that price level on good volume, our calls will gain traction quickly.

We have plenty of time left in PAAS, so keep holding for higher prices! Our targets are at $17 and $20.

Until next time,

Justin Bennett

Remember, if you’d like to comment on how you’re doing in the service, or if you have any questions or concerns, please feel free to drop me an email at [email protected]. I’d like to know how you’re doing!

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.