Weekly Update: July 30, 2014

| July 30, 2014

Weekly Update: July 30, 2014

 

Big Picture Outlook:

No doubt about it, it has been a rough few weeks in the oil patch. Oil and gas names have been filled with indecision as investors decipher economic news and earnings.

One look at the Energy Select SPDR (XLE) and you’ll see what I mean…

Energy Select SPDR

As you can see, this carefully watched energy ETF has done nothing but trade in a sideways pattern for the past month. Even though XLE is still in an uptrend, plenty of oil and gas names have responded to the uncertainty with fairly hefty losses.

But like I said in yesterday’s trade alert, the odds still favor bullish positions in oil and gas names. Obviously, the timing of our entries becomes extremely important in this environment.

Now listen closely…

If XLE breaks decisively below technical support at $98, my views towards oil and gas names will change. If that level is pierced to the downside, we’ll likely see a mass exodus of capital from oil and gas names.

Let’s get to our open position updates…

 

Portfolio Recap:

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

After running to new 52-week highs at $43.12 a few days ago, SE is experiencing some selling in today’s session. The pipeline operator is trading just over $42 a share as I write.

Remember, our first profit target at $42 triggered a few weeks ago. That means conservative investors may have already taken profits off the table. Aggressive traders may want to hold their calls for a rebound and eventual run to our second profit target at $44.

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

BWP came within 15 cents of our $20 profit target last week. Unfortunately, much like SE, BWP is experiencing some selling in today’s session.

But don’t let this short bout of profit taking sway you. BWP remains in a strong uptrend, which means the odds are still in our favor for higher prices.

Keep holding BWP for additional gains…

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

HK is suffering a rather severe downturn in recent trading. The small-cap oil and gas explorer is flirting with the $6 area as I write. Hopefully HK can outperform analysts’ estimates with their earnings release after the market close today. What’s more, we’re still waiting for the company’s TMS well results to send shares back to higher prices.

Keep in mind, HK already hit our first profit target of $7.50. As a result, only aggressive investors should be holding HK for higher prices.

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

Like many oil and gas names, TPLM is stuck in an indecisive trading pattern. However, the stock did make another run to $12 a few days ago, which allowed conservative investors to take profits.

Remember, our first target is at $12 and our second is at $14. If you’re aggressive, keep holding your TPLM calls for higher prices.

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

CNP is really starting to get on my nerves. As you’re likely aware, CNP took a dive back down to $24.60 in today’s session.

In addition to today’s downdraft, we have to keep in mind our CNP calls expire in a few weeks. As a result, time value in our calls is starting to erode quickly.

For now, keep holding your CNP calls for a rebound.

Remember, even though CNP has yet to hit our price targets at $28 and $35, our call contracts ran to a 100% gain in late June. That means some traders may have already taken a profit.

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

With silver still stuck in a tight trading pattern around $21 an ounce, HL hasn’t really done much in recent trading. The silver miner is still stuck in a tight pattern between $3.20 and $3.40.

We have plenty of time left here, so keep holding these calls for a potential run to higher prices. Our profit targets are $4 and $5.50.

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

Another week of indecisive price action for PAAS…

Investors are clearly waiting for more signs from the silver market before taking this name higher. The good news is, PAAS found good technical support at the $14.75 area last week.

Keep holding your PAAS calls for additional upside. Our targets are at $17 and $20.

. . . . SandRidge Energy (SD) December 19, 2014 $7 Calls

In spite of billionaire Leon Cooperman’s outperform rating, SD is suffering a rather hefty downturn in recent trading.

Remember, SD hit our risk control line at $6.60 a few weeks ago. As a result, only aggressive investors should be holding their SD calls for a rebound.

If you’re still in this trade, SD has very important technical support at $6.

. . . . Southwestern Energy (SWN) September 19, 2014 $43 Calls

Unfortunately, the downturn in natural gas pricing has yet to fully run its course. Cooler than normal temperatures are expected to consume a large portion of the US this week and next. As a result, we may see some big inventory additions in upcoming EIA reports.

As you’re aware, SWN hit our risk control line at $40.85 in recent trading. If you’re conservative, you may want to close this position to conserve capital.

Aggressive traders may want to keep holding SWN for a rally to higher prices.

. . . . Noble Energy (NBL) September 19, 2014 $72.50 Calls

No doubt about it, bears had their way with NBL again. The international explorer dropped to a low of $66.66 in today’s session.

Obviously, this isn’t how we want this trade to start out. However, unless there’s a big breakdown in XLE in the near future, I still see NBL rebounding sharply in coming sessions.

There are multiple forms of strong technical support at these prices.

Keep holding your NBL calls for a looming relief rally unless shares cross the risk control line is at $66.50. If they do, conservative investors may want to close this position to conserve capital.

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.