Evening State of Play

Let's start with energy.

Natural gas led the way again, getting past $7.60 per decatherm late this afternoon (chaaa-ching!). The latest from the Climate Prediction Center late this afternoon was the clincher for the bulls:

"Valid Friday, January 26, 2007 - Tuesday, February 06, 2007

Summary of Forecasts & Hazards

For Monday January 29 - Friday February 02: A massive Arctic air mass, one of the most extensive seen in recent years, is expected to overspread much of the eastern two-thirds of the Nation during the first half of this period, with at least one reinforcing cold outbreak in the latter part of this period."

That's a pretty frisky longer range outlook from CPC.

Some are calling this a "suckers rally" in nat gas, but that's a big mistake and shows great inexperience. As Jim Sinclair notes on his site, it really is as simple as traders in NY and Chicago feeling that it's cold outside and that it's time to bid nat gas higher. And as Stephen Schork of the Schork Report has wisely pointed out in his newsletter, imagine what the price of NG would be if we had a real winter this year!! Now of course, we won't get carried away, much above $8 would be getting carried away, but since it did get cold, and nat gas is a winter fuel, even with all the extra supply, no great surprise that it would rise.

But the story for crude goes even further than just WX. The president announced a goal of doubling the size of the Strategic Petroleum Reserve over the long term. The gov't will begin modest crude purchases of 100k bpd this spring (SPR read here), which enables the long term contango to live on. This news broke via Sam Bodman late Tuesday afternoon. Could we end up seeing $57 crude this week... an amazing turnaround in dynamics. I warned earlier in the week about jumping to foregone conclusions about crude falling below $50 right away. It may not be completely game over for the bears, but in the world of futures, you must be constantly prepared for changing dynamics and often a big clue of a coming change is when prices swing for what seems to be no good reason. Now we get a better understanding of why we saw the turn higher in the crude market late last week.

The president also called for a 20% reduction in gasoline consumption in 10 years, but details were lacking. Wsj.com wonders how it will happen too: (Read Here via Subscription). So it will be interesting to see how the ethanol names fair tomorrow after the big run of the last few sessions. I had noted a couple of names on Monday, and I took some money off the table late today to lock in some gains and may exit completely tomorrow. Like ODA25 (http://optionstheeasyway.blogspot.com/) this blog is not set up to record real time trades, which would be darn near impossible with the futures trading that I'm doing these days.

By the way, did anyone notice that the sleepy coal stocks were on the rise today? That's a stock group to examine again tomorrow along with energy stocks in general tomorrow. This is a big reason why I spend much time on energy. It is a vitally important group in the stock market and a rebound in energy stocks, provided the rise in energy doesn't get out of control, could actually go a long way in helping the market to overcome tough resistance levels.

Gold... (chaaaaaa-ching!! again). http://www.jsmineset.com/ remains the place to go for full gold analysis, and if you are interested in gold, it's not a bad idea to check out the community at the Comet Gold boards at: http://cometgold.com/forums/view_forum.php?id=2. Given recent gains, a breather wouldn't be a surprise.. we'll see, though.

EuroFX drifting higher by 5 points after scooting past $1.30 earlier today. My prediction for a full blown correction earlier this year way down to $1.27 sure was dumb wasn't it? I must have taken too much Nyquil that night. LMAO. It just proves that you can go overboard with charts. I love charts and TA, but technical analysis by itself? As I've said before I think it needs to work hand in hand with what's going on out there in the Twilight Zone.

As noted a few days back, Yahoo call options were unusually heavy and it turns out that with its Panama project on track there was enough happiness to push the stock up 4% in after hours trading this evening. This likely means that Terry Semel keeps his job for at least another quarter, or two. Can you imagine the hell hole it must be at Yahoo! hq these days, with all the small people (that's everyone below 'Terry') worrying about how 'Terry' feels... and wondering if 'Terry' is going to blow his stack, was Terry's mocha latte just right, did 'Terry' drop the F-bomb again when someone accidentally said Google in his presence, and 'Terry' this and 'Terry' that. Oy. As for GOOG, if YHOO is able to turn chicken you-know-what into chicken salad, perhaps GOOG can further reverse its share decline tomorrow. It was up over $5 after hours.

Even with today's rebound in the stock market, we remain locked in the ongoing range. It does look like we may move higher tomorrow, with stock futures in decent shape and Asian markets on the rise. 1430 cash on the S&P still remains a level that many technicians continue to talk about, and I still want to see a real close above 1432. I want to see the market close ABOVE resistance.

The whores and pimps of the lending industry - pretty much anyone and everyone in my book that lured mostly completely dumb and unknowing people into ARMs and negative-AM mortgages - have apparently gotten religion. Bank of America, Citi, among others are reaching out to these borrowers before the borrowers take the lenders over the cliff. (Read here) wsj.com subscription required.

By the way, what was up with Jim Webb... doesn't he know how to blink? And, Hillary, did they take her through the cosmetology center that was featured in the Wizard of Oz that cleaned up the Lion and Tin Man, or is that just soft focus lens technology they're using these days?