There are 2 major views on the metals right now.

• the bull is dead
• the bull is hibernating

Related Sector Posts:

Update on Bonds, Dollar, & Euro

Sectors Most Likely To Fall

Short Candidates In the Tires Index

On 13 May 2012

Loads of wisdom here and if you have kids the first couple of minutes will be extra special to you.

By Karen Starich

Facebook is set to launch it’s initial public offering on May 18th. The social media giant has an initial target valuation as high as $100 billion. Looking at the astrology for May 18th we can get some clues as to how the stock will do, and the potential risks involved with the trade.

Mark Zuckerberg, co-founder and Chief Executive at Facebook, recently celebrated his 28th birthday making the Sun’s placement in the IPO chart conjoin to his birth Sun. This is a powerful placement for the founder and the company to share in a new creative venture that will carry far into the future.

Looking at the short term trading opportunity for the stock IPO, there are some considerations in the May 18th date that should be taken into account. The strongest aspect for the IPO is a trine with Saturn (steady business model) to Venus in the sign of Gemini (social networking and communications). Venus, however is moving retrograde, and for a corporation’s chart could indicate they may have an initial breakdown that they will have to recover from. The positive trine shows the potential to be practical and overcome a potential setback.

The weakest point in the May 18th chart, and the one that could cause the most immediate difficulty, is a sesqui-square (135 degree angle) between Jupiter (the planet of expansion) and Pluto (the planet of covert agendas). The aspect suggests there could be inconsistent and abrupt changes in business acquisitions that could involve the company in red tape and lead to investor uncertainty. Recently Facebook made two acquisitions, Instagram and Microsoft patents, totally over $1.5 billion. According to some reports the Instagram deal was the sole brainchild of Zuckerberg’s, and the board’s approval was basically “symbolic” after the deal was already done. As of the IPO date the deal with Instagram remains open while the FTC completes a review of the takeover. This could bring some setbacks to the company’s stock the first week of June when there could be negative news regarding the company’s possible over extension and over expansion that could be viewed as a credit risk. Jupiter is also inconjunct Saturn (150 degree angle and shaped like a boomerang) on the 18th, and suggests investors should use very careful deliberation before making any financial move with this IPO.

A good chart to compare is the Linkedin, Inc. (LNKD) IPO, which ironically was on the same date of May 18th last year. The stock soared to $120 and then fell back to $60 within the first month. There could also be turbulence in the general markets at the end of May, similar to last August, so from my view I prefer to let the dust settle on this IPO.

The following is by Karen Starich, who uses astrology to forecast events in the financial markets. Check out Astrology Traders for specific dates and in-depth analysis of future events in the various markets she covers.

Related Astrology Posts:

Super Moon Brings Down The Financial Sector

Market Astrology: Solar Eclipse

Market Astrology: More Netflix Downside

By Chris Ebert

As with all technical indicators, the Option Indices are intended to be tools to help traders plan future trading in a manner that increases the probability of a profit. Last week, it was reported here that the Long Call/Married Put Index (LCMPI) was in danger of reaching a level that would indicate that the current bull market had ended. As of May 10, the Index had not reached that level, although it was very close. It is even closer this week.

The LCMPI measures the strength of a bull market. When long calls or married puts with terms of 112 days, 28 days, and 7 days all become unprofitable, it is a strong indication that a bull market has ended. The LCMPI has not been in negative territory since early December 2011, so a change in the Index would mark a significant change in the sentiment of the market. When emotions change, new price patterns often emerge.

As of May 10, the requirement for the LCMPI to turn negative was that the S&P 500 remained below 1349. Because the Index progresses with changes in market prices as well as volatility, the bar has been raised slightly this week; the SPX now needs to remain above 1369 in order to prevent a change in the LCMPI. Given the current trading level of 1340, that is a very real possibility.

When the LCMPI indicates that a bull market has lost its strength, traders should take note. In order to eliminate false signals, the Index requires that all three periods verify the same market conditions in order for a switch between bullish and non-bullish. Without a sudden, unforeseen rally by week’s end, the LCMPI will be tripped to non-bullish for the first time in about five months. Once it is tripped, it is not likely that it will return to a bullish indicator for several weeks, or possibly months. The requirement, that the Index changes only when all three measurement periods verify the same conditions, is meant to shield traders from noise. A switch between bullish and non-bullish is a relatively rare and significant event for the LCMPI.

When the LCMPI is tripped to non-bullish, the implications to option traders buying long calls or married puts may be obvious; such trades will probably have very low odds of returning profits. However, such a change should also cause “buy-the-dips” stock traders to reconsider how effective that method will be if the bull market is truly over. For those participating in long-term investments such as retirement plans, a non-bullish LCMPI provides an opportunity to evaluate whether their portfolios, even those that buy the dips through dollar-cost-averaging, are allocated too heavily in stocks in a market that is no longer in a strong uptrend.

The other option indices, the CCNPI and LSSI, are also indicating changes in the emotions of traders and those updates will be available here later in the week.

The preceding is a post by Christopher Ebert, who uses his engineering background to mix and match options as a means of preserving portfolio wealth while outpacing inflation. He studies options daily, trades options almost exclusively, and enjoys sharing his experiences. He recently co-published the book “Show Me Your Options”.

Related Options Posts:

Option Index Update 05.10.12

Selloff May Trip Option Index

Option Index Update 05.04.12

SLW closed today at 24.40 and the area of support where I would get interested in this stock is the $17.75-19.25. That would represent enough of a “fear factor” that metals need to represent a good buying opportunity and it takes us down to significant support going back to 2008-2010. We are currently in a down trending channel and if it breaks I think it can realistically reach these support level.

Dollar looks ready to break out above significant resistance which would be very bad for the general markets. Euro is confirming strength in Dollar by the weakness in it’s own chart. Bond strength is confirming weakness in general markets. I’ve been bullish long term on Bonds for quite some time and while there may be a bubble in bonds the weekly chart doesn’t show an overbought state so this could persist for some time.

Get a new SPX options strategy delivered each week to your inbox.

The following is an except from last Sunday’s premium newsletter by Karen Starich, who uses astrology to forecast events in the financial markets. Learn how Astrology Traders can give you an unparalleled edge in trading.

Full Moon May 6, 2012

The distance of the full Moon on May 6th is 356,954 km from earth, which is the minimum range.  If you have an opportunity to see the Moon at night you will notice the size is larger than normal.  The Moons gravity on the earth becomes much more intense and these lunar events are called “Super Moons,” because of the increased tidal occurrences and severe weather they can produce.  I should point out that the last “Super Moon” was March 19, 2011 at a distance of 356,580 km.

The Moon also effects the mood of the general public towards the economy,  government,  future growth, and anger that can lead to social unrest.  The Moons influence is the strongest a few days leading up to the full Moon.  This was very apparent in the markets on May 3rd and again on Friday after the jobs numbers came out,  suddenly the public sentiment shifted very negatively on the jobs numbers and the markets pulled back .  Confidence in the financials turned negative on May 3rd as well, and as I suggested in past updates there would potentially be indictments or removals of top NY banking officials the first week of May. On May 3rd Bank of New York Mellon’s CEO Robert P. Kelly, 57, stepped down on accusations the bank was ripping off clients in foreign currency swap transactions, as reported in the New York Times.   Bank of New York Mellon is a custodial bank with 1.3 trillion assets in management.  On May 2nd Bloomberg announced CME Group CEO Craig Donohue, at the center of the still lingering MF Global scandal, retired effective immediately a full eight months ahead of his scheduled retirement in December, Donohue is only 50.

There are most likely other high profile banking CEO’s that will be leaving on accusations of criminal banking practices.  My point here is to stress the importance of the rare full Moon (Super Moon) as a turning point in the public’s tolerance for questionable banking practices, and the mortgage foreclosure crises.  The pressure (gravity) of the public anger and disgust for the banks deemed to big to fail could accelerate into mid August, and could lead to a U.S. downgrade.  In my view, the noose is tightening on the Fed and banking elite, and what is happening here is the acceleration of the public’s intolerance and the desire to end their control.

This war with the banks will most likely intensify this Summer and lead to a much bigger financial crises in 2014, in what I call a potential financial earthquake.  I have advised in the past to consider using a credit union for banking.  Credit unions do not engage in derivatives or speculative currency swaps, and no one has ever lost their deposits in a banking scandal involving a credit union.

In the following video I answer a reader’s question about using stops in one’s personal trading when using a paid subscription service. Sometimes trades do go against us and it’s important to take steps to protect our trading capital.

Reader questions:

“When using a service like All About Trends (or any similar service) does it make sense based on your trading experience to use stop-loss orders in spite of the fact they don’t recommend specific stops?”

2 Questions you must answer before subscribing to any trading service.

1. Does this services resonate with me?
2. How will this service integrate with my overall trading methodology?

By Mobile Guru

Recently I’ve written a couple articles explaining why I believe Northern Oil & Gas (NOG) is The Bargain of the Bakken, specifically comparing their metrics to those of Oasis (OAS) and Kodiak (KOG) to demonstrate why I believe Northern provides a lot more value for your investment dollar. This article will focus on a topic of keen interest to all oil & gas producers with property in the Williston Basin (commonly referred to as “The Bakken”), but particularly to those that are exclusive to, or have very heavy exposure there, including Continental Resources (CLR), EOG Resources (EOG), Whiting Petroleum (WLL), Oasis Petroleum (OAS), Kodiak (KOG), Triangle (TPLM) and my personal favorite at current prices, Northern Oil & Gas (NOG).

The Bakken is commonly considered the largest deposit of hydrocarbons in the Western Hemisphere, producing large quantities of very high quality light, sweet crude with high production levels of oil relative to natural gas. There is virtually zero dry hole risk and, in my opinion, huge potential for growth as estimates of the size growth both in area and in number of layers that can bear oil on an economic basis and as technology continues to advance, enabling producers to extract a higher percentage of the oil in play.

The Bakken is just one layer of oil bearing shale in the Williston Basin, and in recent years the Three Forks has been identified as another layer that produces economic quantities of oil and gas. Recently, in earnings calls and presentations, Continental Resources has disclosed that they have discovered 3 lower benches (layers) of the Three Forks that have shown very impressive early results; this discovery may increase the estimated amount of oil in the Williston Basin by 61% or 323 billion barrels of oil!

From Continental’s Q4 2011 earnings call:

Harold Hamm (CEO & Chairman): “The latest game changer is the Three Forks lower benches. We’ve literally found an additional oil saturated reservoir in the Bakken that again, makes this world-class oil play bigger and better.”

Jack Stark (Senior Vice President for Exploration): “Continental acquired 6 cores of the entire Three Forks formation in 2011 and discovered there were up to 3 additional layers within the Three Forks formation. The significance of this discovery, and what makes it such a game changer, is that the volume of oil in play for the field almost doubles with these added reservoirs.”

“Based on our estimates, the oil in play now stands at around 900 billion barrels of oil versus our previous estimate of 577 billion barrels of oil. This in turn should ultimately translate into more technically recoverable reserves for the field.”

Stark went on to talk about the first two test wells that had been drilled. I think this is critically important in understanding the economics and long-term promise of the Williston Basin. A typical well can have a 6 month payback, with subsequent production largely going straight to the bottom line. But some estimates were that only 4% of the oil in the Williston Basin would ultimately be recovered. If advancing technology and ongoing exploration and discovery continuously increases that number, think about what happens to the value of the companies that control large amounts of acreage in that area!

This makes Continental’s Q1 2012 earnings call all the more interesting. Read the following excerpts from Jeff Hume, President and COO:

“We are very pleased with the performance of our first 2 second-bench Three Forks producers, the Charlotte 2-22H and the Sunline 11-1. The Charlotte has produced 64,000 barrels of oil equivalent in 5.5 months and the Sunline has produced 48,000 barrels of oil equivalent in 2.8 months, and both wells continue to produce in line with the typical first-bench Three Forks producers. It looks like we’re going to average around 650,000 EURs from early data, from early curves. So it looks very strong right now.”

“By year end, we plan to drill 8 additional wells to test not only the second bench of the Three Forks, but also the third bench as well. Our first third-bench well will be drilled in the 1,280-acre Charlotte unit. This well will be located 0.5 mile east of the Charlotte 2-22 second-bench producer and 660 feet east of the Charlotte 1-22 Middle Bakken producer. In addition to this third-bench test, we also plan to drill a first-bench Three Forks well between the 1-22 Middle Bakken well and the 2-22 second Three Forks well. When finished, this will be the first 1,280-acre unit in the play with wells completed in 4 different members of the Bakken petroleum system. We’ll approve or disapprove that there’s interference between those horizons. Right now, we don’t believe there is, but we’re going to do the work, spend the money to do that. I believe we just have a larger petroleum storage system than we previously thought, and the reserves will increase as we get that data in hand, and that will be later this year.”

“We also have a 320-acre development project underway for the Middle Bakken and first bench of the Three Forks. The Midnight Run project, as it is called, consists of 3 Middle Bakken producers and 3 Three Forks producers within one 1,280-acre unit. The wells in each horizon are spaced 1,320 feet apart, with the Middle Bakken wells offset 660 feet from centerlines of the Three Forks. These wells began producing in the first quarter with average IPs of 1,300 barrels of oil equivalent per day per well. Interference testing is underway, and results will help guide future drilling density for the play.”

When asked about where they will spend their $550 million CapEx increase, Hume responded “it’s all entirely going to the Bakken.” (They produce in the Niobrara/DJ Basin, the Anadarko Woodford and the Bakken.) He added,

“we’re obviously participating in all the acreage sales in our key plays, mainly the Bakken. Right now, we’re very concentrated, very focused on consolidating acreage in the Bakken.”

So we have an $18 billion world class oil & gas producer at the forefront of pushing the envelope on maximizing the efficiency & productivity of an elephant oil & gas reservoir. They believe these 3 new layers will increase the amount of recoverable reserves 61% and they believe at least 6 wells can be drilled in a double section (3 to the Bakken and 3 to the Three Forks) and are putting their money where their mouth is by devoting their entire CapEx increase to the Williston Basin and by participating in all the acreage sales there.
Meanwhile, here are comments made by Mark Pappas, Chairman & CEO of EOG Resources, on their recent conference call:

Each of our 2011 quarterly calls had a business-as-usual tone for our Bakken Three Forks asset, even though we continue to be the largest Bakken oil producer in North Dakota. However, we’ve recently generated exciting and very significant results in 3 different parts of the play, indicating we have more potential upside and growth opportunities than we’ve previously indicated. The 3 focus areas are: First, in the last quarter, we mentioned early success in our partial core area with 320-acre downspacing compared to our original 640-acre spacing. We recently drilled 3 additional 320-acre downspaced wells, and all are successful with IP rates ranging from 992 to 1,393 barrels of oil per day. Working interest in these wells vary from 51% to 61%.

Additionally, production from the offsetting original 640-acre wells has doubled after the downspaced won [ph] after completions. The typical 640 acre well that had been online 4 to 5 years was producing 100 to 200 barrels of oil per day before the downspaced well was drilled, and is currently making 200 to 400 barrels of oil per day. This gives us production gain from both the new infill wells and the older producing wells. Based on these results, we’ll implement 320 acre downspacing throughout our core area, and we’ll also test 160 acre down-spacing.

In our Bakken Lite area, our original development plan was on 320 acres. And by next quarter, we’ll have some 160 acre downspacing results.

In summary, the downspacing is working and the reserve impact will likely be larger than the 50 million net barrels of oil we indicated on the February call.
Second, we continue to achieve excellent results in our Antelope Extension area, which is 25 miles southwest of our core area. Both the Bakken and Three Forks are productive in this acreage. We’ve recently drilled a group of Clarks Creek wells. 4 wells were drilled in the Three Forks formation and had IP rates of 926, 1,393, 1,455 and 3,415 barrels of oil per day, plus 1 million to 3 million per day of rich gas. A Bakken well we recently drilled in this same area had an IP rate of 2,300 barrels of oil per day with similarly associated rich gas. We have 100% working interest in all these wells. These results are better than we expected.

Third, in Far Eastern Montana and Western North Dakota in our Diamond Point and Stateline areas, we’ve recently completed 7 wells that IPed at rates between 540 and 1,100 barrels of oil per day. We have an average 63% working interest in this area. All 7 wells have high rock quality that we expected, and this opens up a brand new large development area for us where we have identified over 200 drilling locations. Additionally, in late April, we commenced 2 waterflood pilots in our Core Parshall Field to try to improve our current approximately 8% recovery factor and we expect to have preliminary results by year-end 2012.

In summary, we’re much more excited than we were a year ago about our remaining Bakken and Three Forks potential. The Chairman & CEO of a $33 billion company which happens to be the largest oil & gas producer in the Bakken and has major interests in 3 other fields has just said that they’re much more excited about the Bakken given recent experience with how close they can drill wells and still have large production from the new wells and double the production of the existing wells!

As I stated earlier, the Bakken has virtually zero dry hole risk and, in my opinion, huge potential for growth as estimates of the size of the field grow both in area and in number of layers that can bear oil on an economic basis and as technology continues to advance, enabling producers to extract a higher percentage of the oil in play. Continental Resources has just stated that they are having impressive early success with three newly discovered layers that appear to have economic quantities of oil and that they are decreasing the amount of space between wells while still getting impressive results. EOG is also downspacing their wells and expanding their view of the size of the field. Drilling wells to several different layers or closer together increase the ability to achieve large cost savings by perhaps using the same wellbores or at least by using the same drilling pad. In essence, probably the 2 best of breed producers in the Bakken have just materially increased their view of the size of the field, the number of oil bearing layers in the field and the number of wells that can be drilled within a given area. I believe that trend will continue for many years, if not decades to come.

In the past couple weeks, I’ve shown why I believe Northern Oil & Gas (NOG) is the Bargain of the Bakken and how it is inexpensive compared to two other Bakken players. Given recent developments out of Continental and EOG, all the Bakken producers may well be substantially undervalued and Northern (who is involved in many of Continental’s and EOG’s wells and acreage), is all the more compelling!

The following is a guest post by fellow investor mobile guru, whose interest lie within the mobile revolution, start-ups & IPO’s, and intellectual property. Production, acreage and other metrics were taken from respective company press releases, enterprise value data from Yahoo Finance.

Related Posts By Mobile Guru

NOG is the Bargain of the Bakken

Acquisitions Drive Key Metrics In Mobile Sector

Patent Infringement Wars Between AUGT & MM