Friday, August 2, 2013

Why $100 Crude Could Send This 8.4% Yielder Soaring

Despite the markets' push to record levels, energy stocks have been locked into a bearish slump for the past two years.

With natural gas plummeting to an all-time low in the summer of 2012 and crude contained by slow economic growth, energy stocks have been big underperformers. That shows up in the sector's 3% gain in the past five years, 12% gain in the past three and just 7% gain in 2013 against the S&P 500's 20%.
But with natural gas trading well above its multi-year low and crude recently breaking above $100, the stage could be set for a rebound.

One of my favorite ways to cash in on the energy trade is with offshore drillers. I'm bullish on the offshore drilling industry because that's where most of the new oil is being found. In the past decade, more than 40% of all newly discovered oil was found in ultra-deep water, bypassing both onshore and near-shore discoveries. Big finds in the Gulf of Mexico and off the coasts of Brazil and Africa will also continue to drive demand for offshore drilling services.

There are plenty of great offshore drillers to choose from, including Transocean (NYSE: RIG), Diamond Offshore Drilling (NYSE: DO) and Noble Energy (NYSE: NBL). But my favorite pick from the group is SeaDrill (Nasdaq: SDRL), one of the largest offshore drillers in the world with a fleet of 66 drill ships and a market cap of $20 billion. With crude surging above $100, Seadrill is up 20% in the past two months. Take a look:
But looking forward, Seadrill stands out from its peers because of its unique combination of growth, value and income.  (more)
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Guest Post: Why Oil Could Move Higher... Much Higher

The conventional wisdom of the moment is that a weakening global economy will push the cost of commodities such as oil down as demand stagnates. This makes perfect sense in terms of physical supply and demand, but this ignores the consequences of financial demand and capital flows. The total financial wealth sloshing around the world is approximately $160 trillion. If some relatively modest percentage of this money enters the commodity sector (and more specifically, oil) as a low-risk opportunity, this flow would drive the price of oil higher on its own, regardless of end-user demand and deflationary forces. If we grasp that financial demand is equivalent to end-user demand, we understand why oil could climb to $125/barrel or even higher despite a physical surplus.(more)
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Was That The Natural Gas Correction?

It’s funny, when times are good and the security in question is hitting new 52-week highs, the commentary seems to revolve around “buying the dip”. We get that in US Stocks, we heard it about Japan this year, and in the Spring we were certainly seeing that “buy the dip” mentality regarding Natural Gas after prices more than doubled in less than a year.
Well, in Natural Gas we got it. A third of the entire move off last year’s lows has just been retraced. On Monday, Natgas Futures hit the lowest prices since February. So was that it? Was that the correction, the dip to buy, if you will?
I think it can be. Take a look at the daily bar chart of $NG_F
7-29-13 ng f
We’ve now retraced 38.2% of the rip-your-face-off rally from last year’s lows. And on these new lows this week, shorts are excited and longs are getting stopped out. This can be a nice recipe for a correction low in Natural Gas. I think we can look at $3.50 as a key level. This was support from the consolidation throughout most of July. And there is memory here from 6 months ago. So I think it would be a bullish development to see natty back above there.
Remember, the intermediate trend in NatGas is still up. And in the short-term we’ve seen a pretty steep correction. So I’d be at least watching this one a little bit closer down here.
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Three Commodity Stocks to Buy on the Dip : FTI, NBL, PSX

Domestic equity indexes continue to float higher in uncharted territory as corporate earnings results have largely beat expectations, giving investors few reasons to cut winning trades amid the euphoria. Although housing market indicators have cooled off a bit in recent weeks, the Fed’s recent reassurance that it wouldn’t taper prematurely has certainly resonated very well with investors; the S&P 500's
(INDEXSP:.INX) sharp rebound following the “tapering scare” that ended in late June is a testament that buyers will step in as long as the Fed lifeline is there.

Amid the ongoing rally on Wall Street, bargain shoppers are in search of trending stocks at attractive levels. As such, below our firm takes a look at three big commodity stocks that are trending higher, but have slipped in the last few trading sessions, thereby offering an attractive opportunity to “buy on the dip” in the near future.

The stocks included here are rated as “buy” candidates for three reasons. First and foremost, each of these companies boasts a market cap upwards of $10 billion along with average daily trading volumes topping the $1 million mark, in an effort to weed out smaller, more volatile, trading prospects. Second, these securities are trading above their 200-day moving averages, thereby implying they are in longer-term uptrends. Lastly, these stocks are also trading below their 5-day moving averages, which makes them attractive for swing traders looking to buy in before they rebound. As always, investors of all experience levels are advised to use stop-loss orders and practice disciplined profit-taking techniques. (more)

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Brookdale Senior Living, Inc. (NYSE: BKD)

Brookdale Senior Living, Inc. owns and operates senior living communities in the United States. It operates in six segments. The Retirement Centers segment owns or leases communities comprising independent living and assisted living units in a single community that are primarily designed for middle to upper income senior citizens. The Assisted Living segment owns or leases communities consisting of freestanding, multi-story communities, and freestanding single story communities, which offer housing and 24-hour assistance to mid-acuity frail and elderly residents. The CCRCs-Rental segment owns or leases communities that offer various living arrangements and services to accommodate physical ability and health. The CCRCs-Entry Fee segment allows residents in the independent living apartment units to pay a one-time upfront entrance fee to use certain amenities and services. The Innovative Senior Care segment provides outpatient therapy, home health, and hospice services to residents of its communities and other senior living communities. The Management Services segment operates third party communities under the management agreements.
To review Brookdale's stock, please take a look at the 1-year chart of BKD (Brookdale Senior Living, Inc.) below with my added notations:
1-year chart of BKD (Brookdale Senior Living, Inc.) BKD has been trading sideways for the majority of the year. The stock has also created a $30 resistance (teal) and a major support level at $26 (brown) during that period of time. A break through the $30 resistance would also be a new 52-week high for the stock and should mean higher prices ahead. One last thing to notice: If the stock pulls back first to prepare to break higher, the level of $28 (blue) could act as support.
The Tale of the Tape: BKD has a 52-week high resistance at $30. A long trade could be entered on a break through that level or on a pullback to $28. If a test of $28 doesn't hold, a fall to $26 would also provide a long opportunity. If the stock breaks below $26, a short trade should be entered.
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Tips for bond investing

by Jim Stack, editor InvesTech Market Analyst

Jim StackOver the past couple months, there's been a dramatic shift in the bond market that has many investors worried about their fixed income safety nets.

While the sharpness of the bond sell-off may partly be a knee-jerk reaction to an anticipated Fed move, it illustrates the potential losses that can occur in fixed income investments -- particularly in bond funds.

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Gold is Finally Ready to Launch

Gold appears to have wakened from what has been a very challenging 10 month decline. Ever since last September’s rally failed (bull trap) to take out the all-time high set back in 2011, it has literally been straight downhill for gold. But the signs of a trend change are everywhere now, and this is evident technically in the charts and within the changing composition of the Cycles. Be warned we are due a $50 pullback this week towards a Daily Cycle Low. However beyond that, all indications point to a substantial rally about to take hold. According to my Cycles analysis, we’re looking at a 10 week gold rally back to the $1,520-50 region.
The Weekly Cycle
There are plenty of reasons to get excited here, as the early developments of this new Weekly Cycle point to a longer term trend change. Gold is now 4 good weeks into a Weekly Cycle (these Cycle average 20 weeks) which was confirmed once it broke above the declining trend-line and the Weekly Swing Low point (Above $1,301). The technical indicators show strength is building while the slow moving weekly oscillators are beginning to bullishly cross. There is no way of knowing for sure how far this Cycle will run, but the early indications are very encouraging as the Cycles on every time-frame are turning higher.

With a new Cycle, we’re on the eve of yet another significant rally. We know from past experience that big Right Translated Weekly Cycles can easily gain 25% before topping. When we look at the weekly chart there is some volume resistance at the $1,400 area, but besides that it’s clear sky back up to the $1,520-50. It’s at that area where gold was supported numerous times in the past before eventually collapsing, and it’s at that level where resistance will now be found. That area is where plenty of trapped longs can still be found and it’s where this coming Weekly Cycle rally will top. (more)
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