UNG and TSO

I sold MOS and AGU at a loss and bought TSO and UNG. This is really a hurricane play and bottom fishing as well.

Both TSO and UNG are way off high (72% and 42%) respectively. If gulf oil and natural gas productions are shut down ahead of hurricane, and refineries near the coast are shut down ahead of hurricane, these two will benefit from the supply cut.

1. TSO doesn't have refineries in gulf coast, therefore should benefit more if gas price spikes. Also, the crack spread seems bottomed, so TSO should do well in the near term, like a few months.
2. UNG has the similar spike pattern during the 2005 hurricane season.
3. However, this week, UNG and TSO actually went down yesterday and pretty much flat today, ahead of hurricane Gustav. This speaks loud and clear of the demand destruction, that is, people don't care and keep pushing oil and NG down.
4. Or, a few big players tried to keep the price down, for whatever (political?)reason. This is a mystery to me. Maybe smart money already knows something we don't know.
5. If Gustav is a no event, I can see UNG to 34 and TSO back to 15. I am nervous to say the least. Have to cut losses at some point. And I won't hold these for too long. Learned lessons in UYG.
6. Speaking of UYG, after I sold, it spiked about 8% and the UNG I bought was down about 6%. Talking about bad timing and bad skill. But I still think UNG is better holding now than UYG, time will tell.
7. My mistake in UYG, I could sell at 24, twice, and I didn't and took a loss and switched to UNG, one day early. If I switched yesterday, I am a genius.
8. It's wrong and not profitable to time and bet on certain event, it's better to use charts and choose none event time to trade on fundamentals or technicals. Be sure to stick to this rule in the future.

UNG

I sold UYG and bought more UNG today. It's a big change based on following:

1. Oil and natural gas has come down hard recently and this is the first up thrust. It has the potential to be a strong rally.
2. Oil to natural gas ratio is 6 to 1 to be normal, now it's 13 to 1. NG is cheaper and cleaner than oil.
3. If hurricane hits gulf, it has bigger impact on NG than oil, since all US NG supply is from US; just like 2005, NG doubled in the wake of Katrina and Rita, before it came down in Feb. 2006.
4. After labor day to winter, these are usually strong months for natural gas, maybe due to the fact that most of US use natural gas for heating.
5. Of course, downside risk is the destruction of demand in oil, therefore it maybe a short lived rally.

Added APC and UNG

Considering the recent drop in NG, and hurricane is on the corner, I decided to add back NG stocks in APC and added UNG today. I may sell XTO and CHK too early. Yesterday if I bought XTO and CHK, then I am a genius.

But get a chart of 2005, I found natural gas moved up (compared to oil) the most during the busy hurricane year, therefore, it's relatively cheaper to add NG related stocks now.

I chose APC over XTO and CHK for the reason that it has more reserves and it announced a $5B buyback (that's almost 18% of the stocks). APC is 25% off high, vs 31% and 33% for XTO and CHK respectively, this, actually, indicates the strength of APC over XTO and CHK. UNG is almost 40% off high.

It's not the triumph, but the struggle

Today, I read the best Olympics story in Beijing. It meets the standard of the Olympics Creed: It's not the triumph, but the struggle, that define our characters and our lives. See story here:http://simplesport.blogspot.com/

It's about a tiny 17 year old girl from Somalia, Samia Yusuf OMAR, who ran last in women's 200 meter round 1 heat No.5 (actually, not her best event, she is a middle distance runner), she ran 32.16 second, the first runner ran 23.04 second and 7th place runner ran 23.67 second, that's almost 70 meters behind in a 200 meter race! But she ran her best, and the half empty stadium noticed there was still a runner, with about 50 meters to go, they rose to their feet to cheer her up. This to me, is the best Olympics moment.

The little girl could quit, since her country sent her to the wrong event; the people still in the stadium could just politely let her run, instead, they cheered her up on their feet! This is the best Olympics moment.

Think about this, in this Olympics, world records were smashed one by one; the opening ceremony defied old standard and created new world wonder; and yet, it's the struggle and dignity in this last place finished 17 year old girl, that touches millions of people, if you ever read this story!

Here is the Olympics creed:

"The most important thing in the Olympic Games is not to win but to take part, just as the most important thing in life is not the triumph but the struggle. The essential thing is not to have conquered but to have fought well."

Yes, it's impossible to win every time, but it's possible to try your hardest every time. That's life I shall live. I shall live the Olympics dream every day: it's not the triumph, it's the struggle!

Sold NG and KOL

I sold XTO and KOL today. Also sold CHK on Wed. So now I am out of NG stocks and KOL. Still holding UNG.
It's hard to say what cause oil up $5 yesterday and then down $6 today. But I don't want the profitable positions become losing positions, that's the reason I sold XTO,CHK and KOL. Long term, I like NG stocks and coal.
I had similar experience in AGU and MOS, after two days I bought it, both of them were like 6-10% above the price I bought, and I didn't sell. Now both of them are under water, specially MOS. Can't love a stock.

Sharp and patient

1. I need to be sharp, take profit when I have one, specially in position like UYG. I let UYG went through $24 twice and now I am under water again.
2. On energy and Ag stocks, I was too early in MOS, AGU and POT. Too early in UNG. But XTO and CHK are close to the bottom. After today's pop, these two are profitable. And I sold CHK today to raise cash.
3. So two things to improve in order to make money:
4. In oversold sector, like XLF, once I choose double ETF, I should take profit when I have one. Yes, it can go higher, but it's oversold for a reason: it's weak fundamentally and technically.
5. On the other hand, some solid picks, like energy and Ag stocks, need patience, why enter big positions once, I should average down. If I do this in MOS and AGU, I can be profitable now. Instead, I am under water in these two. And I am late on XTO and CHK, or "patient enough", or "lucky enough", that's why I am winning on these two.
6. Think I will reduce XTO if it continue to rise, since this energy correction may not be over, so be careful.
7. Someone commented on PDO, just too small for me. I don't have enough insight to play a small cap stock, too risky.

Olympics

It's Olympics, and it's the best opening ceremony ever!

Trading is like being an athlete for Olympics, it takes years of training and, you have to aim at your target, you can't think for one second you can pick winners and losers like you "figured out".

1. My holding of UYG is OK.
2. My adding of commodities stocks is too early to say the least. MOS was as low as 92 today, and AGU and POT all got similar hair cut.
3. XTO, KOL and CHK, I was too early as well, but they are holding relatively well. I think the downsides in energy and Ag are overstretched and close to a short term bottom.
4. Meanwhile, UYG still got chances to break out. But downside risk remain, should oil pop up again, UYG will go down when that happens.
5. I need to be careful out there.
6. On the other hand, my selling of commodity stocks (MOO,POT,MOS,AGU,KOL,PCX,etc) early this year (June, I think) was great, if I am still holding them, I need to talk about huge losses. Again, you should be nimble and take profit.
7. I need patience, my timing of entering financials and now commodities are too early.

Stocks that are due for a bounce

1. XTO. Now at 43.8. High was 73 about a month ago, I added since 48, then 45 , then 44, and then 43. Yes, I added too early again. The 48 can be avoided since it's a huge up day on XTO, and I should wait.
2. AGU. Now at 79. High was 113. I added since 85. It shot up to 93, then sold off hard.
3. MOS. Now at 110. High was 163. I added since 120s. it shot up to 132, then sold off hard. This again reminds me that i should always take a quick profit.
4. POT. Now at 173. High was 241. I added a small one at 200.
5. KOL. Now at 42. High was 60. I added at 44 and 41 today.
6. CHK. Now at 43, high was 74. Added since 45.
7. UNG. Now at 40. High was 64. Added at 40.

I think overall, commodities related stocks and ETFs are due for a bounce. Even GDX, MOO are attractive now. I am still feel good about adding these.

Market can break out either way, if I have to pick, I think it's to the upside, and I think general market may be joined by commodities related stocks in this leg up. If that's the case, my holdings of UYG and XTO will go the same direction for the near future. I expect this to be a short covering rally, in both energy and financials.

Energy, fertilizers, coal are oversold short term. Financials are oversold long term and just about to break out.

Added more energy stocks

Today, oil sold off more than $4, and UNG is down 7% at this point. I think the energy stocks, specially natural gas stocks are oversold before today's selling, now they're way oversold. I added more energy related stocks.

1. Added XTO. It's down 41% since it's topped 4 weeks ago.
2. Added KOL. Down 8% today.
3. Added UNG. Down 36% vs. oil down 18% 4 weeks ago.
4. Added CHK. Similar to XTO.

Yes, no one for sure knows where is the bottom, but I think a bounce is likely in these.

Another lessons I learned is fertilizer stocks, I got in early and it had a strong bounce, I didn't sell, now it's under water after today's big sell off in fertilizer stocks. You can't attach to a stock and think it's up from where you bought, you have to take quick profit.

Financials are held ok, and I still sit on a big UYG position.

Added some natural gas companies

While the market in general held up pretty well, I decided to play long not only on general market (via financials UYG), but also added fertilizer companies and then two natural gas companies in XTO and NBL.

1. I think oil is down fast and big enough, it's possible there will be a bounce in oil. And if that's the case, some oversold energy stocks like XTO and NBL will have a decent bounce. Therefore, I started to add these two.
2. Overall, I will not play oil directly, I think it's overbought for the long term. And natural gas is about half expensive as oil, therefore, it's more attractive than oil, just like coal. And natural gas is cleaner than coal. XTO, APA, CHK, DVN, APC are some of the leaders in natural gas. I chose XTO and NBL, because they are smaller than APA, and DVN, therefore, it's a possibility that big oil, like XOM and BP, will acquire these companies since they're running out of oil. Just a thought.
3. I also bought oversold MOS and AGU, three days ago they are up almost 6% above the price I bought, now they're almost back to where I bought them. I believe agriculture is still in a bull market long term, therefore I should hold these.
4. UYG showed some strength the last two trading days, outperformed market, which is rare the last few months. Since it's way oversold long term, reverse to mean, it may outperform the market the next few months, until the next shoe drop, of course.
5. Another area, which I watched for a few years, is biotech finally showed some strength. I may need to use IBB to get exposure in that area.
6. So still, commodities are my main focus, in that space, fertilizer, natural gas, coal are some areas indirectly benefit from the commodities bull cycle. I don't believe the weak dollar story is over. Oil may only take a break in a long term up trend, but I believe other energy will do better than oil, like natural gas, coal, wind and solar.