Weekly Update: September 17, 2014

| September 17, 2014

Weekly Update: September 17, 2014

 

Big Picture Outlook:

In today’s FOMC meeting, Federal Reserve Chairwoman Janet Yellen announced quantitative easing will end in October.

However, she also revealed interest rates would remain near zero for a “considerable time” after the monthly bond buying program ends.

Upon hearing the news, investors sent the US Dollar index to new 52-week highs near 84.75. As you may remember from last week’s update, the rallying Greenback is providing significant headwinds for commodities like gold, silver, and oil.

What now?

If the Dollar index breaks firmly above 85 in coming sessions, we could see an extended run to the 88-89 area by year-end. As you may know, this zone reflects the multi-year highs set in 2009 and 2010.

Thanks to the Dollar rally, it’s fairly tough sledding in the commodities space. Gold, silver, and oil are fundamentally cheap, yet they won’t likely find substantial buying interest until the Greenback turns lower.

With this information in mind, I have two trades ready to hit your email inbox by the end of this week!

Let’s get to the position updates…

 

Portfolio Recap: 

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

Only two more days and this trade will be history. As you know, we’ve had ample opportunity to collect hefty profits in our SE $39 calls over the past three months. And even though SE weakened in recent trading, shares are still above our $39 strike price. As a result, if you don’t exit this trade by the closing bell on Friday, you’ll own SE shares on Monday morning.

Congratulations on a great trade!

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

Much like SE, BWP has weakened considerably in recent trading. However, shares are still trading well above our $16 strike price. That means you’ll need to exit this trade by the close on Friday to avoid owning BWP shares on Monday morning.

Remember, BWP hit our first profit target at $20 and ran to a maximum gain of 160%.

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

With TMS well results already in the public domain, we’ll need a different catalyst to send HK to higher prices. Whether we get a bullish development to send HK higher by expiration next month remains to be seen.

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 is still trading in a tight, range bound pattern between $11 and $12. However, given the recent strong earnings report and the stock’s ability to hold near 52-week highs, there’s a great chance this name moves sharply higher soon.

Keep in mind, conservative investors should already be out of this trade with profits. Aggressive investors still have great odds of TPLM achieving new 52-week highs by our expiration next month.

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

Other than the fact SD is deeply oversold and billionaire Leon Cooperman is a major shareholder, there’s really nothing to get excited about with SD right now. Obviously, we’ll need exceptional news in coming months to get our SD $7 calls back in a profitable position.

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

Barring a news event that sends SWN to $44.83 by this Friday, this trade will go down in the loss column. Remember, SWN hit our risk control line at $40.85 in late July. That means conservative investors had the chance to preserve capital.

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

NBL spiked back above $70 a share yesterday when Atlantic Equities initiated the oil producer with an “overweight” rating and $88 price target. Despite yesterday’s analyst upgrade, it’s unlikely our NBL calls get back in the money by expiration this Friday. If they do, remember to close this trade by the closing bell at week’s end.

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

No doubt about it, VLO succumbed to hefty selling in September. However, conservative investors should have collected profits just shy of 100% when the oil refiner hit our first profit target at $54 in late August.

With expiration hitting later this week, this trade is officially closed.

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

The early September weakness in SYRG ruined our chances at profits in this trade. Had that downturn not occurred, I have no doubt SYRG would have at least surpassed our first profit target at $14. Alas, it was not meant to be.

With our $12.50 calls still in-the-money, make sure you close this trade by the closing bell on Friday. Otherwise, you’ll own SYRG common stock on Monday morning.

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

Buyers are slowly returning to WLL after the stock succumbed to a nasty downturn the first week of September. Shares of the Bakken producer are crossing the tape just shy of $85 as I write.

It’s important to note Canaccord Genuity initiated WLL with a “buy” rating and $108 price target this past Monday. And remember, WLL came within $0.08 of our first profit target at $93 before diving to our risk control line at $83. As a result, only aggressive investors should be holding WLL calls for a rebound.

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

With PVA hitting our risk control line at $13 last week, only aggressive investors should be holding the $15 PVA calls for a rebound. Our profit targets are $16 and $18.

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

Believe it or not, silver broke to a new 52-week low at $18.45 an ounce in recent trading. Due to this development, it’s likely the commodity tests multi-year lows at $18.17 in the near future.

Unfortunately, the extended weakness in silver prices sent SLW down to our risk control line at $22.90. Conservative investors should consider closing this trade to conserve capital.

Aggressive investors should keep holding your SLW calls for a potential rebound. We still have a relatively large amount of time until expiration. Our profits targets are $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 CustomerService@CommodityTradingResearch.com. I’d like to know how you’re doing!

Category: Commodity Trading