Caution on CHK And WLT Proved Correct Call, They Both Got Hammered
April 29, 2008 10:35 PM
As i said last night “if not for the Fed meeting coming, both CHK and WLT should be a short right here”. Both got hammered today. Should have just made the call to short it with a hard stop at the highs as I smelled trouble. My only concern was the fed meeting and the market direction is not certain after, and I like to make calls where i believe there is a high degree of probability. I have repeatedly said to avoid WLT here in the last 3 days however, and that call proved correct. WLT was down 4.84% and CHK down 4.55%. Not a bad day’s “work” as that is higher than an entire YEAR return in a money market…. in about 8 hours…..
While it is difficult to know the direction here, extreme caution is in order. We have to clear Monday’s high in the SP to be long the market here, and the highs on both CHK and WLT are an issue, until proven otherwise. WLT has earnings May 1, so best to let that play out first, IMO.
If we sell down after the Fed, it looks like we need to clear the 1370 area to the downside to put pressure on the market. I will update once I see the reaction.
CAUTION: XLF, WLT, CHK
April 28, 2008 10:36 PM
If not for the Fed on Wednesday, I would say short WLT, and CHk right here and extreme caution in this range on XLF. AAPL cleared the possible reversal attempt attempt early on and took out that play. it had to clear Friday’s low to “technicially” put a short on, and it never even came close. Not exactly sure where this strength in AAPL is coming from as their numbers do not support this strength, IMO. But you have the “AppleHeads” that want to own this stock. Volume has dropped dramatically in the last 2 days on Apple however, so this rally is weak, at best. AEM fell again, not a shock at all. The Cramer heads are going to be beat to BK on his call to be long at the highs. If the dollar firms, AEM could easily see $35. Big if, I know.
The Fed decision on Wednesday takes all plays off the board, basically, as it is going to move afterward, most likely. But be careful here.
Was Right On Both CHK and UPS, WLT Is Still An Avoid Here
April 26, 2008 7:48 AM
I said Thursday night that I did not believe we had seen the highs in CHK and that weakness should be bought. Up 5.6% on Friday. UPS only moved down .05 cents, but it did so in a reasonably big market rally. WLT is still and avoid as it needs to clear the high to be long up here and the stock seems somewhat overvalued anyhow. The stock is overvalued relative to CHK, and that is why I said if you want to be long the energy space, CHK was a better play here. CHK was up 5.6% while WLT was only up 3.74%. An extra 2% move by swapping out and going with CHK as I recommended.
CHK: Buy Further Weakness
April 24, 2008 10:46 PM
If Chesapeake Energy (CHK) trades much lower, weakness should be bought, IMO. $48.60 should try and hold here. if we clear $48.60, it could spike lower. I do not think that would be a reason to panic as $48.60 is not a “must hold”. If we have seen the highs in CHK, and I do not think we have here….they should be at least retested.
04/25 Update: CHK soared Friday…up 5.6% while the SP was up a meager .65%.
CHK Should Go Higher…. Careful Chasing…But Long Checkdowns
April 22, 2008 10:12 PM
Once CHK cleared $51.20, the trade was long. (I did mention to be long CHK on March 24th near $44, see previous posts) We have not yet seen the highs, IMO. I would rather not chase, but if it checks down, the trade should be long, unless we clear today’s high FIRST and reverse. The stock seems pricey, but I have no idea of the value of stocks in the commodity arena as it all depends on the dollar. If the “american peso” continues to plunge, then commodities will continue to rise UNTIL a worldwide recession significantly lowers demand.
Dollar Made New Low: We Made Same Mistake As I Warn About Often…. “Listening To Experts”
April 22, 2008 9:49 PM
I repeatedly warn to ignore all the talking heads and their nonsensical hype. They are mostly wrong. There was so much talk about the dollar reversing, from both overseas bankers, governments trying to talk up the dollar, and Wall St., so I bought into it. The problem was the chart said the dollar was going lower. Once again, the chart wins. Another all time low on the dollar today.
The problem is I said caution on all commodity stocks the other day, and they all did pull back, on that exact presumption. The problem is, they were all wrong. Plunging dollar is causing all commodities to soar. While I do believe that we are in a bubble on a massive scale in all commodities, and will implode at some point, i have no idea when that point will be. Bubbles almost always last FAR longer than anyone expects.
This has caused CHK to spike far higher along with most others. While i did say LONG CHK way back at about $44.00, I also warned caution was in order the other day, which has proved dead wrong.
There. We were wrong. I told everyone we would EVENTAULLY be wrong. While it wasn’t a direct trade that was wrong that would show up, we were wrong, nonetheless. Hmm…I don’t care much for being wrong…but that’s the market.
Stay Cautious on ALL Commodity Stocks Until Further Notice….
April 20, 2008 5:09 PM
There could be at least a near term botton in the dollar here and that could really pressure commodity stocks near term, as I mentioned before the market opened on Friday. If you want to stay long the market, I believe extreme caution is in order here on all commodity stocks, especially gold and silver miners like AEM. There is a lot of talk overseas from foreign bankers about how to push up the dollar as it is hurting the Euro’s big time in exports, and leading to worldwide inflation as most everything is priced in dollars. Use caution here, on AEM, ABX, BRK, WLT, etc. AEM was a short in the high $70’s area anyhow and WLT and CHK are both an avoid in the area as well.
If you noticed, both AEM and ABX were actually down in a huge rally on Friday, as I said pre-open.
Long Everything BUT Commodity Area….That Area Will Lag
April 18, 2008 9:08 AM
If you are looking to get on this short covering rally today, best to be long in areas where there is a large short interest. That would be most anything BUT commodity plays. They will all likely lag the market gains today. The dollar has stabilized …for now…and this will pressure commodoties. As I have mentioned, commodities and commodity stocks are an inverse dollar trade. Avoid them here….avoid CHK near yesterdays high as well.
CHK: Still Having Issues with $49.87
April 16, 2008 12:15 AM
CHK is still having issues with the high. I would not short it here this time as it has already attempted to clear it once. The short play was short the first time there, which has already happened. It appears poised to clear it. I still am NEVER a believer in being the Long Ranger…ever…. wait for it to clear…then buy logical checkdowns if no reversal. I am still very skeptical of the valuation, but if we clear that high, it should up a trade long under it. The trade was long when i said above $42.15…so chasing it is way late in the game anyhow…
CHK: Call To Be Long Was Correct, But Should Not Have Been Long Near The High
April 14, 2008 8:11 AM
I mentioned back on 03/24 CHK was long. Thursday it ran to a high $49.57. Do NOT be long in that area unless the high clears. Period. Risk/reward is very poor, and it has since backed off. That is the purpose of the SB numbers - to know when caution is in order. That number would have saved investors over $2.00 in 2 days….. and possibly more today… The SB numbers may clear, they may not… but in the market, avoid being the Lone Ranger…. let other’s do it, as it is likely to turn into Custer at Little Big Horn instead.
My calls on CHK, both long and short are up over 20% in about a month, if both sides were taken and held. In this market, if you get over 10% in 3 weeks, it is probably best to take the money …and run.
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