Weekly Update: May 28, 2014

| May 28, 2014

Weekly Update:  May 28, 2014

 

Big Picture Outlook:

Energy commodities were mixed in today’s trading. Oil pulled back from multi-month highs with a drop of $1.23 a barrel. However, WTI crude is still trading near $103, which is high enough for most well managed oil companies to turn a substantial per barrel profit.

Meanwhile, natural gas is back on the upswing…

The gaseous commodity jumped $0.11 per MmBtu today to close at $4.61. Investors are concerned above average US temperatures will hamper storage injections over the next two weeks.

Speaking of which…

EIA storage reports for natural gas and oil are tomorrow due to the recent Monday holiday. These reports will be closely watched by energy investors and will bring extra volatility to oil and gas names.

As far as precious metals go…

Gold is tumbling thanks to strong economic data reports yesterday. The yellow metal is down just over $30 an ounce in the past two days.

As you know, we’ve been mostly steering clear of gold and silver miners thus far in this service. Bears are still in control of precious metals, which makes it rather hard for miners to catch a decent multi-week bid. But at the same time, most miners are very oversold on a longer-term basis, which makes downside potential limited.

The combination makes the mining industry tough to trade right now.

If you’re wondering, that’s why we’re mainly sticking to oil and gas names for trades right now. The industry is hot, and will likely stay that way as Summer arrives.

But be prepared. When the timing is right, I’ll unleash some high profit-potential trades in the mining industry.

For now, let’s get to our portfolio update…

 

Portfolio Recap:

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

ECA is still stuck in a tight consolidation at the $23.00 area. Remember, technical resistance is at $23.50 for this Canadian oil and gas producer. If shares can break above that level with substantial volume, we could see another run higher.

As you’re likely aware, both our profit targets have already triggered in this trade. That’s why only aggressive investors should be holding a few of their original call contracts for higher prices.

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

AXAS is still lingering around the $5.00 area. We’ll need a solid run higher over the next month to add further gains to our $2.50 call contracts, which already have a hefty return!

Remember, both our AXAS profit targets have already triggered. As a result, only aggressive investors should be holding a small portion of this trade for further gains.

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

GDP is on the way to higher prices!

Shares of the oil and gas producer are surging to just under $28.00 in today’s session. The rally has our June $17.50 calls selling at $10.10 per contract- a 648% gain from our entry point of $1.35!

Remember, both our profit targets have already been hit, and we’ve collected massive gains in GDP. However, there are some aggressive traders who are still holding a few contracts for higher prices.

If you’re one of them, I suggest you keep holding until expiration next month!

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

Another new 52-week high for SE!

The US natural gas pipeline operator is testing $41 a share in today’s session. The ongoing rally has our September $39 calls selling at $2.35 this afternoon. That gives us a 95% gain from our entry!

Now remember, we still have plenty of time until expiration in these calls. That’s why I suggest you stick to the original plan and hold these calls for our profit targets of $42 and $44!

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

CLF is still dropping through the floor!

Shares of the industrial metal miner dropped solidly below $16 today. The downdraft sent our June $17 puts up to $1.69 per contract today– an 87% gain.

Remember, both our profit targets have triggered in this trade. Please take some of your gains to the bank. But since expiration is still a few weeks away, aggressive traders should consider holding a few puts for a further drop in CLF.

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

PDCE is tinkering with technical resistance at $63 a share again. Like I mentioned in last week’s update, the expiration on this trade is just a few weeks away. As a result, we’ll need a quick move higher from PDCE to get our call options back into a profitable position.

Aggressive traders should consider holding onto these June $70 calls for a break to higher prices. Remember, our profit targets are at $70 and $73.

Keep in mind, multiple Wall Street analysts have price targets of $75 and higher on PDCE.

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

PQ is inching back towards the recent May highs at the $6.40 area. But more importantly, shares of the small-cap oil producer are still holding on to the uptrend line that has been in place since mid-February.

Let me show you what I mean…

As long as PQ trades above the green line, the odds are good that our $7.00 and $8.00 profit targets will be achieved.

Keep holding your PQ calls for higher prices!

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

BWP is consolidating last week’s hefty rally to $18 a share. Shares of the pipeline operator are trading at $17.35 as I write. We may see a few more days of sideways action before BWP resumes its trek to higher prices.

Remember, our profit targets are $20 and $24. Expiration is still months away so patience will be your friend with this trade. The risk control line is at $13.90.

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

PBR is stuck in a consolidation pattern at the $15 area. But don’t let that worry you just yet. We have plenty of time for PBR to resume the upward march from multi-year lows set a few months ago.

Remember, our profit targets are at $17.50 and $19.00.

Keep holding for further gains!

. . . . Cabot Oil & Gas (COG) July 18, 2014 $16 Calls

COG is still struggling to get back in gear. The US natural gas producer has been bouncing around the $36 area for most of the past week. The outlook for natural gas pricing is still strong so let’s keep holding the July $16 calls for higher prices.

Until next time,

Justin Bennett

***Editor’s Note*** 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 a line at [email protected].

 

Category: Commodity Trading