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Morning Rage 10.1.2012

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Cal-Maine Foods Inc. (CALM) is scheduled to report quarterly financial results this morning before the market opens. Cal-Main is the largest producer of shell eggs in the US. A market cap of 1.08B, the stock has seen a steady yearly growth of 50%, $0.04 below the 52 week high of $44.98. The stock was up $0.36 on Friday.

The ISM Manufacturing Index will be released today at 10 am EST. The survey measures manufacturing employment, production, new orders, supplier deliveries, and inventories. Any result above 43 shows growth in the US economy, but a shrinking manufacturing sector. Any number above 50 shows a growing manufacturing sector. Analysts are projecting a tenth of a point in growth to 49.7.

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Oil Remains Lower After Yesterday's Sell-off 9.18.2012

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Benchmark crude closed at $96.62 a barrel, down $2.38 or -2.4%.  Oil had its biggest intraday swing since early June, hitting a low of $94.65 a barrel, after trading at a session high of $99.52 Monday morning, failing to break through the $100 key technical level. 

The drop in U.S. crude was not as deep as the sell-off in Brent crude oil, which sank from $115.20 a barrel at 1:52 p.m. to $111.60 just 180 seconds later as trading volumes spiked despite the usually quiet Rosh Hashanah holiday.  Brent crude settled down $2.87, or -2.5%, to $113.79 a barrel.  Energy prices had spent the majority of the session trading marginally higher, with support from geopolitical tensions from around the world. 

There is speculation among traders that a potential ‘fat-finger’ trade is responsible for the selling as prices rapidly fell more than $4 in just 20 minutes.  There are also rumors of a strategic oil-reserve release.  These rumors most likely derived from a report done by Reuters on the Obama administration considering a release much larger than the 30 million barrels from last year.  However, the White House has denied these rumors with an official stating, “all options remain on the table, but we have nothing to announce at this time.”

Some analysts simply suggested the price of oil had gotten too high given continued weakness in the global economy, and it’s due for a correction.

Energy traders have enjoyed solid gains in the month of August with Crude-oil prices on the NYMEX up 8.7% from Aug. 1, and Brent crude gaining 7.7% over that period.  Oil recently traded to a high above $100 on Friday partly on concerns that the tension in roiling parts of the Middle East and North Africa could trigger supply disruptions.  Enthusiasm in the oil markets may soon fade however, due to an increasing negative outlook on global demand and high inventory levels.

Perhaps the euphoria over the Fed has worn off.

Crude spent much of the European session in the red, with the October contract off 52 cents, or -0.5%, to $96.10 a barrel. 

Ciro J. Lama is currently an undergraduate studying Finance at the Zicklin School of Business – Baruch College

Twitter: @TraderCantalino

Website: CantalinoAssetManagement.com

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Morning Rage 8.31.2012

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Dow futures have been volatile for the past 24 hours. Yesterday, before opening, the Dow saw a 42 point dip to 13042 and followed the same trend after open, breaking below the 13,000 mark for a two week low. The losses followed reports of stagnant jobless claims in the U.S. and Germany.

Crude Oil futures (95.21 [+0.5]) up about one half of a point overnight, while Gold futures (1661.80 [+3.8]) gained about four points.

OmniVision Technologies (OVTI | 17.33 [+8.93%]) traded 1.4 million shares overnight, gaining a point and a half. Earnings were weak but beat expectations. OVTI relies on the implementation of cameras in new technology, for their image recognition chips. OVTI supplies it’s chips to Apple for iPhones and iPads.

Splunk Inc. (SPLK | 35.25 [+4.75]) jumped 15.57% last night reaching a prices it last hit at the end of May. Splunk Inc.’s software collects indexes data with heterogeneous formats and enables users to analyze the data real time. The source of the gain is an announcement by SPLK that fiscal year 2012 revenue estimates are being raised as third quarter revenues were $45-$47 million.

Alex Kalish has a masters in economics from Suffolk University.

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Crude Declines Despite Tropical Storm and Refinery Explosion 8.28.2012

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The main reason for the fall in prices is the shutdown of refineries along the Gulf Coast.  The storm is expected to halt production at 12 of the nation’s largest refineries along the Gulf Coast, lowering their demand for crude in the short term.  The thought that the storm may lead to the United States opening their strategic reserves to make up production also contributed to the decline in crude today.

Despite the fall in crude, gasoline and heating oil did not see the same decline.  With refineries shut down and no reserves of refined products to be released the supply of heating oil and gasoline will be disrupted far more than crude supply.  The spread blew out in trading today but closed off of highs.   

With the concern over production in the Gulf fading markets now look to Venezuela and try to evaluate how much the explosion at the Amuay refinery will impact the price of crude.  The explosion occurred early on Saturday morning with a confirmed death toll of 41 people.  The fires are still burning but Venezuelan officials say that the situation is completely under control.  The refinery is capable of producing as much as 645,000 barrels per day, and officials claim that the refinery will be fully operational within 2 days of the all clear.  The shutdown of this refinery doesn’t appear to be having a large effect on prices in the short term, but medium term effects will depend on whether or not the Venezuelans can stick to their time table for reopening the refinery.