Weekly Update: November 26, 2014

| November 26, 2014

Weekly Update: November 26, 2014

 

Big Picture Outlook:

Tomorrow is a very big day for the oil markets. As you may know, OPEC is meeting in Vienna to set 2015 production levels. Investors are sitting on the edge of their seats, wondering what the Middle Eastern oil cartel will do to stem the recent collapse in crude prices.

While many analysts disagree with me, I believe OPEC will cut production to support prices. I’m sure the cartel understands that if they don’t take meaningful steps to support prices, the oil market will take another steep dive lower.

While OPEC’s top producer, Saudi Arabia, can withstand a low price environment, other members can’t. Venezuela, Iran, and Libya are seeing their national budgets slip deeply into the red with oil prices at current levels.

Despite the uncertainty, one thing is for certain…

The oil market is going to be very volatile come Friday morning when US investors return from Thanksgiving. Speaking of which, I hope you have a wonderful time with family and friends tomorrow!

Let’s get to our open position updates…

 

Portfolio Highlights:

Just a quick note: I won’t update every open position every update. I focus on the positions with significant news or price movement.

. . . . US Natural Gas Fund (UNG) January 16, 2015 $21 Calls

The price of natural gas eased slightly this week on forecasts for warmer US weather the next few days. The commodity is trading at $4.40 mmBtu as I write, which is down from the $4.69 high set a few days ago.

Remember, UNG hit our first profit target at $23.50 on November 7th, and again on November 20th– giving us gains of 200% on our $21 calls. Only aggressive investors should consider holding UNG for a potential rally to higher prices by January.

. . . . US Oil Fund (USO) December 19, 2014 $32 Calls

You can expect fireworks in USO on Friday. Once investors hear of OPEC’s decision, the oil ETF is going to move sharply higher, or lower. While I believe OPEC will cut production dramatically, there are simply too many variables in tomorrow’s meeting to predict with 100% certainty USO’s next move.

Remember, USO hit our risk control line weeks ago. That means conservative investors should already be out of these calls. This is definitely a situation where only the most aggressive investors should be holding USO call options into a risk event.

. . . . Ultra Petroleum (UPL) January 16, 2015 $25 Calls

Despite the fact UPL is a natural gas provider, the market seems to be lumping the company’s shares in with oil producers. UPL sank to $22 yesterday as oil prices tested yearly lows near $74.

Listen closely…

UPL has not yet hit our risk control line at $21.75. But given the recent price action, there’s a very good possibility UPL will react violently with oil prices on Friday. It may be higher, it may be lower, depending on OPEC’s decision.

If you’re conservative, you may want to play it safe and exit this trade before the close of trading today.

Our profit targets are at $26.75 and $29.00.

. . . . Cameco (CCJ) March 20, 2015 $20 Calls

CCJ popped to $19.97 on technical buying a few days ago. But since then, shares of the uranium miner/processor have pulled back to the low $19 area.

It’s important to note there’s technical resistance for CCJ at the 200-day moving average, which lays just over $20.00. Shares must break higher on solid volume to overcome this hurdle.

Despite the overhead resistance, the situation in the Uranium market still points to break higher in CCJ.

Keep holding your calls for higher prices. Our risk control line is at $17.49 while our profit targets are at $22.00 and $24.00.

. . . . Chesapeake Energy (CHK) January 16, 2015 $24 Calls

Despite a slight pullback the past two days, CHK remains in an uptrend off the mid-October lows. Keep holding your $24 calls for higher prices. Our profit targets are $26 and $27 while our risk control line is $21.80.

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