Weekly Update: September 10, 2014

| September 10, 2014

Weekly Update: September 10, 2014

 

Big Picture Outlook:

Unfortunately, it has been a tough week in the commodities space as a whole. Oil, gold, silver- they’re all being hindered by advances in the US Dollar.

In spite of continued inventory withdrawals, WTI crude is trading under $92 a barrel- its lowest point since early January. What’s more, gold and silver are stuck near multi-month lows at $1,245 and $19 an ounce respectively.

But here’s the deal…

The US Dollar is nearing very important technical resistance. Take a look…

As you can see, the Greenback has rallied substantially since early July. But with the currency nearing the highs set in mid-2013 (red line), we’ll likely see the currency start turning lower soon.

Keep in mind, the Federal Reserve will be giving investors more guidance on their interest rate objectives next Wednesday. This highly important FOMC meeting will likely be the catalyst for the US Dollar’s next move.

Let’s get to the position updates…

 

Portfolio Recap: 

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

SE sold off sharply from the $42 level in recent trading. But remember, you’ve had ample time to take hefty profits in this position. With expiration approaching next Friday, you’ll need to close this trade soon if you haven’t already.

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

Even since BWP pushed above our first profit target at $20 in mid-August, sellers have ruled the roost. The pipeline producer is currently trading at $19.25. Remember, this trade expires next week so make sure you close it soon.

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

In spite of all the recent analyst upgrades and good well news, HK couldn’t shake the recent spate of weakness in the oil and gas industry. The Tuscaloosa Marine Shale producer is trading just shy of $5 a share.

Remember, conservative investors already took profits at $7.50 in late June. As a result, only aggressive investors should be holding HK calls for a rebound.

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

TPLM reported very strong Q2 earnings yesterday. The Bakken producer reported earnings of $0.20 a share on revenues of $142 million. Despite the good news, investors sent TPLM down sharply due to the general pullback in the entire industry.

Conservative investors should already be out of this trade with profits. Aggressive investors still have a good chance of TPLM achieving new 52-week highs by our expiration next month.

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

HL hit our risk control line at $2.95 in recent trading. Of course, with all the value already erased from our $3.50 calls, there wasn’t anything to sell. Despite the week left until expiration, this trade is officially closed.

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

PAAS fell below the risk-control line at $13.50 this past week. As a result, I recommend everyone close this trade, even aggressive investors. This trade is officially closed despite the month left until expiration.

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

Thanks to the oil exploration industry downturn, SD is below $5 a share. Remember, SD hit our risk control line weeks ago so only aggressive investors should be holding for a rebound.

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

Despite this week’s gains in natural gas, there’s little chance our SWN calls get into a profitable position by next week’s expiration.

Remember, SWN hit our risk control line at $40.85 in late July. That means only aggressive traders should keep holding SWN calls for a potential rebound.

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

The downturn in oil stocks couldn’t have come at a worse time. NBL dropped below $70 in today’s session, so it’s unlikely our calls get into a profitable position by next week’s expiration.

Only aggressive traders should be holding their NBL calls for a potential rebound.

. . . . Valero Energy (VLO) September 19, 2014 $52.50 Calls

Turns out our first profit target at $54 was the top for VLO. The oil refiner dropped below $51 today as the EIA reported a steep build in gasoline inventories. With expiration fast approaching, aggressive investors should consider closing this trade immediately. Conservative investors should have already taken profits at $54.

. . . . Synergy Resources (SYRG) September 19, 2014 $12.50 Calls

SYRG came within 15 cents of our first profit target at $14 last week. Unfortunately, the recent industry weakness dragged shares back down to the $12.50 area this week. With SYRG trading at our $12.50 strike, we’ll have to keep a close eye on this one going into next week’s expiration.

. . . . Whiting Petroleum (WLL) October 17, 2014 $90.00 Calls

No doubt about it, this week’s downturn in WLL is a major disappointment. Shares of the Bakken producer dropped to $82 a share in today’s session before rebounding to $84. Of course, the recent downturn put WLL below our risk-control line at $83, which means conservative investors should be out of this trade.

If you’re aggressive, keep holding your WLL calls for a rebound.

. . . . Penn Virginia (PVA) October 17, 2014 $15.00 Calls

Much like the rest of the oil and gas industry, PVA weakened in recent trading. The Eagle Ford producer dropped to a low of $13.00 today, which also happens to be our risk control line. As a result, conservative investors may want to consider closing this trade. If you’re aggressive, keep holding your PVA calls for a rally. Our targets are $16 and $18.

. . . . Silver Wheaton (SLW) December 19, 2014 $25 Calls

SLW is still dwindling lower thanks to the lack of bullish conviction in the silver market. But keep in mind, next week’s FOMC meeting could be the catalyst that sends silver higher.

Keep holding your SLW calls for a potential rebound. Our risk control line is at $22.90 while our profits targets are at $27.50 and $30.00.

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