holiday spirit

Walking around town in this fine city of Toronto this week, there's no hint of a slowed economy.   Of course, we are talking about a big holiday week here where most people try to enjoy themselves.      When we walk away from our trading screen, and out on the street, we really don't feel the kind of gloom and doom this market fears.  Maybe that's because the major Canadian exchange (TSX) has been up around 20% in 2008, one of the world's best performers.  Why?.  Well, that's because the index is about 50% resource plays!.  So, Happy Canada Day, today.  Hopefully, our resource plays can survive today with the TSX closed today.;).   There's no hint of inflation, no stress and everyone just goes about his/her business it seems.    This is definitely a strange feeling, for us traders who witness all the daily doom and gloom reporting !    When we get back to work and look at the quotes of many companies that supposedly represent the pillars of the economy across the border, things can be so far from the truth.    Companies that are perceived as "American Icons", such as GE, GM, Citi..., their stocks are hitting new low on a "daily" basis!    On the other hand, there are those companies that do nothing but dig stuff out of the ground, are hitting new high on a daily basis.   Even US coal companies are popping IPO's onto the TSX here, one PHC, Phoenix coal just had a 18% pop going from 1.76 to over $2 yesterday.   Ok, the comparison ends here and no more philosophical discussion on how and why or if...

What we want to know, as traders, are questions of when is the overall market going to rebound and when is the madness of the commodity plays going to end?    Either question, if you attempt to answer this in some sort of logical way during the last couple of months, you'd have simply driven yourself insane by now.    We feel the questions are best answered by the market itself, whenever they happen! 

In the mean time, today's strength from DJIM shadowlist came from HK's rosy drill report.  We've highlighted these intertwined HSP plays, GDP, CRK, PVA, XCO will live off 'catalysts' such as results, acreage acquisition etc.   This could not have been more true than yesterday as these plays exploded.    HK provided very strong results, the initial rate is the highest rate so far of 16.8 mmcfpd.   It is twice the rate of those recently announced by ECA, PVA and an average of 5 Bcf per well can easily be assumed based on this.   They also announced acreage increased 83% from 150 to 275K net acres.

We noted before the open of possible catalysts for our resource plays.  We had a timely upgrade of CLF, and continued follow through action from coal plays including JRCC, also highlighted.    In essence, resource plays have covered about 90% of our most recent favourite trades.    Yes,  it'd be hard not to have a great day, even 20 minutes into the open.    Excitement aside, we still have to do enough profit taking to ensure that our hard work get recognized.    Also, we wouldn't want to call today's action a gift either because we'd been riding this for quite sometimes now.    The probability of an upgrade in the steel sector to estimates and stocks themselves, a turn in coal sector and positive catalysts from shale plays have all been discussed extensively in the Journals.  Don't shoot the messengers,  if sooner than later these pause, money should have been made already.  To start, it will be interesting to see the reaction to SCHN's eps today in the entire steel sector.  Will the probably great numbers be cooked in or not, that is the question!!.  Wait and see, here this morning.