Tag - Gpor

It was another good day for stocks, as expected. Surprisingly good earnings from Alcoa (NYSE:AA), along with better than expected initial jobless claims gave investors the confidence to bid stock prices higher.

We're seeing a fundamental condition for economic recovery play out - confidence. I've said it before - an economic system is, at its heart, a belief system. For there to be growth, Americans must believe the U.S. dollar has value, we must be confident that contracts will be honored, we must believe our money is safe in banks, we cannot doubt that we will have jobs to provide for our families.

The financial crisis shook our faith in the U.S. banking system. Rumors of insolvency at Bear Stearns sparked a run on the investment bank that made the rumors real. The same thing happened at Lehman, but the shockwaves echoed around the world. The financial crisis was a crisis of confidence.

Investors saw lots of red in today’s trading session as regional manufacturing data suggested that economy is not picking up as much as had been hoped. Most economists had expected gains in the New York Fed’s manufacturing index but were instead treated to numbers indicating that the factory sector shrank at a more severe rate than expected.

A stronger U.S. dollar pulled oil below $70 away from its eight month high.

As of press time, 3:30 P.M. Eastern, the Dow was down -194.75 to 8,604.50; the Nasdaq was down -46.29 to 1,812.51, and the S&P 500 was down -23.25 at 922.96.

The Russell 2000 Index, comprised of the top 2,000 small-cap stocks, was down 16.77 at 510.06.

Bucking the downward trend today was pharma and financials. Two of the top percentage gainers were JazzPharma (Nasdaq:JAZZ) up 69.7% on positive news about it fibromyalgia drug and MAP Pharma (Nasdaq:MAPP) up 11.89%. MAPP has been on a tear since late May when it shot up to $11.39 from $3.15.

Other small-caps showing leadership today include QEP (Nasdaq:QEPC) up 39.07%, Tongxin Intl (Nasdaq:TXICU) up 24.75%, and two financials, American Capital (Nasdaq:ACAS) up 14.67% and New Century Bancorp (Nasdaq:NCBC) up 14.83%.

Small-cap decliners were lead by Oil-Dri Corp. of America (NYSE:ODC) down 23.24% following Friday’s news that it will lose its largest customer in the cat litter retail segment. Other leading decliners include Virgin Mobile USA (NYSE:VM) down 16.98%, book retailer Borders Group (NYSE:BGP) down 13.16%, and Integrated Electrical Services (Nasdaq:IESC) down 17.64%.

*****Summer doesn’t officially start for a few more days. Tell that to the parents who are now getting their kids off to camp or getting ready for vacation. For the standard two-income household, living easy in summertime is just a memory.

Including today, we have just 12 more trading days until the end of June and the end of the second quarter. I suspect we will have seen the highs for stock prices by then. That is, if we haven’t seen them already.

Oil backed off recent highs on Friday. And that’s likely to continue. Oil was too cheap at $33 a barrel. But $73 is too high, at least for now while much of the developed world is still mired in an economic downturn. We know demand is still weak. And we know there are looming supply issues when demand picks back up. However, the issue right now is the economy.

*****Oil has been rallying as the news cycle has been relentlessly optimistic about an imminent economic recovery. In fact, many leading economists expect U.S. GDP to actually grow in the third quarter.

Oil stocks that we’ve been following have been on a tear the market bottom, including Graham Corp. (AMEX:GHM) up 81%; Brigham Exploration (Nasdaq:BEXP) up 239%; Gulfport Energy Corp. (Nasdaq:GPOR) up 326%. Even the majors like ExxonMobil (NYSE:XOM), Chevron (NYSE:CVX), BP (NYSE:BP), and ConocoPhillips (NYSE:COP) are bringing investors some decent returns, though not as great as small-cap stocks in the same sector.

Investors have bought the rumor of economic recovery. We’ll see how they respond to the news. I’ll be watching oil as the leading indicator for economic expectations.

Right now, it seems like stock prices have priced in a modest recovery. And if investors perceive that there’s not much upside left for stock prices, it would makes sense to trim exposure, take profits, or however you want to put it.

*****We’ve seen anecdotal evidence that investors are moving funds out of the stocks that have led the market higher. Technology has been having trouble making headway. And we’ve seen strength in healthcare and consumer staple stocks. Plus, the Volatility Index (VIX), which measures the cost of put options (which rise in value as stocks or indices fall, thereby giving investors downside protection) has been on the rise.

This suggests that investors are preparing for a downside move for stock prices, or, at the very least, protecting gains they have made.

*****On Mondays, I’m going to start offering a look at the economic data coming out during the week ahead. This week is a bit unusual as all the economic data is out on Tuesday. Tomorrow we get Housing Starts, Building Permits and the Producer Price Index (PPI).

Of course, consumers will focus on the housing numbers. But I’d expect any numbers will be interpreted with optimism. Investors seem to understand that the bottoming process for the housing market will be volatile and that wild swings in the data should be expected.

In my opinion, the PPI is the one to watch. The U.S. dollar rallied a bit last week, but there’s no doubt that massive Treasury bond sales have investors worried about a weaker dollar the potential for inflation to pick up. Add to that improving retail sales numbers, helped by higher gasoline prices, and you have the potential for a higher-than-expected PPI reading. Needless to say, that would not be good for stocks.

I’ll talk to you tomorrow.

Ian Wyatt

P.S. You’ll recall from Friday’s issue we start sharing charting analysis from TradeMaster’s technical analyst, Jason Cimpl. If you didn’t have a chance to catch, here’s the link. You’ll get his take on this week’s market direction. Since this is a new feature for Daily Profit I’d greatly appreciate receiving any feedback from you on it.

All major indices were trading down for much of today's session with the Nasdaq leading the losses by shedding 0.19% to close at 1,858.80. In late trading the Dow closed at 8,799.26 for a modest gain of 0.32% and the S&P 500 closed up 0.14% to finish the day at 946.21.

The Russell 2000, the widely followed index of the largest 2,000 small cap stocks, closed down today at 524.32 losing 0.33%.

Leading the small-cap gainers today was Savient Pharmaceuticals (Nasdaq:SVNT) up 56% to close at $9.26 on news that the Food and Drug Administration said that the firm's gout treatment drug, Krystexxa, works. Based in East Brunswick, NJ, Savient makes specialty biopharmaceuticals as was founded in 1980.

Other small-cap leading gainers include WSP Holdings (NYSE:WH) up 24.5%; Independent Bank Corporation (Nasdaq:IBCPO) up 22.4%; and AC Moore Arts & Crafts (Nasdaq:ACMR) up 16.4%.

Small-cap decliners were lead by Hawaii-based Hoku Scientific (Nasdaq:HOKU) down 30.3% to close at $3.05. Hoku, a raw materials provider for the solar industry, announced that it may be unable to fund its operations over the next year and stated that it will not provide guidance for fiscal year 2010.

The other small-cap stocks posting big share price drops include iPCS (Nasdaq:IPCS) down 21.6%; P&F Industries (Nasdaq:PFIN) down 19.9%; and one of Wednesday's big gainers, Corel (Nasdaq:CREL), which slid 18.4%.

*****Its worse in Europe than here in the U.S. Industrial production dropped 1.9% in a particularly cruel April, nearly double the 1% drop that was expected. First quarter GDP was also down 2.5% for the 16 Euro-zone countries.

The recession there seems far from over, and Europe's weakness might be contagious because it should act as a stark reminder just how tenuous global economic recovery is.

*****Oil prices may have just hit their blow-off highs above $72 yesterday. As you know, I was early to the oil stock party. My SmallCapInvestor PRO readers took a 142% gain on one stock, Gulfport Energy (Nasdaq:GPOR), and we're holding +60% on another. And of course, if you've been following closely over the past six months you know that I've been in and out of Graham (AMEX:GHM) several times.

Now, it's getting late and I suspect the party might be ending, at least for a brief pause. I'm not calling for oil prices to crash. And the $33 a barrel price we saw back in February may never be seen again. But oil stocks, and stocks in general, are due for a pullback.

The 2nd Quarter ends June 30. And it would be reasonable to expect institutional investors to lock in some gains. I'm sure they are using put options to do some hedging, which helps explain the recent rise in volatility. But I also won't be surprised to see some outright selling. And it might have started with yesterday's afternoon drop for the indices.

The Dow Industrials were up well over 100 points in the early afternoon, but couldn't hold it as a late wave of selling left it with a gain of just 30. That's the opposite pattern of what we've seen for much of this rally. Institutional investors have been buying late in the day, supporting prices and leaving stocks with daily gains.

Institutional activity usually occurs at the beginning and end of the trading day, so this is something to keep an eye on.

*****Brazil, Russia, China and India contribute 15% to global GDP, but they have 42% of the world's currency reserves. And they may be on the verge of throwing their liquidity weight around.

Bloomberg reports that these countries will hold their first summit next week, and it's widely expected that they will announce that they are increasing their holdings of IMF bonds. Yes, that comes at the expense of U.S. bond holdings.

Apparently, fears of rising deficits and the potential inflation from an expanded money supply in the U.S. are driving them to diversify a bit.

Investors should take note. While the U.S. muddles through, and Europe continues to be mired in recession, the BRIC countries (Brazil, Russia, India and China) are the only countries in the world that can support their economies without taking on debt.

Chinese stocks are the ones I'm bullish on right now. If there is a slight pullback later this month, then Chinese stocks will suffer the least and more importantly, present great buying opportunities before the next leg up. To get my top Chinese selections, click HERE.

*****Finally, as I announced yesterday, TradeMaster Daily Stock Alerts technical analyst Jason Cimpl has graciously agreed to give us a weekly forecast for the stock market. You can access his video analysis and commentary HERE.

Small-cap stocks pushed higher in early trading action, lifted by a surge in the U.S. dollar, and by yet another economic report that surprised on the upside. At 9:54 a.m. ET, the Russell 2000 (NYSE:IWM) was up 1.52, or 0.21%, at 731.31.

The greenback was on a roll this morning, gaining about 0.9% versus the euro, which would put the buck on a pace to close at the highest level since late March. Dollar strength also was noted against the yen, with dollar/yen rates up nearly 0.7% into the U.S. stock market opening.

Equities markets were lower in after-hours trading, but started to move toward the green after the monthly productivity report beat expectations. The headline figure for productivity came in at a gain of 2.2%, which was above the forecast for a rise of 1.6%. Typically, the productivity report has only a modest impact on stocks, but it did appear to move the S&P 500 about four handles. Perhaps of greater significance is that the productivity report was yet another economic release that topped the forecast, feeding good news to a market that might need it with small caps closing at 13-week highs Tuesday. There’s an old saying in the market that “you have to feed a bull, not necessarily a bear.”

Despite the jump in the U.S. dollar, crude oil prices were still hovering in rare air after setting record intraday and closing price values Tuesday. Amid supply concerns out of Africa, geopolitical strife in the Middle East and analyst forecasts calling for sharp gains in crude oil in coming months, “black gold” remains strong and . . .

The Russell 2000 (NYSE: IWM) is losing ground despite opening in the green.

At 10:12 a.m. ET, the small-cap index was down 5.25 points, or 0.78%, to 668.56. The Dow Jones Industrial Average (INDU) had lost 4.96 points, or 0.04%, to 12,151.85.

Small-cap stocks opened higher on momentum following Tuesday’s move by the U.S. Federal Reserve to make up to $200 billion in expanded loans to financial institutions in an effort to ease the credit squeeze.

But the bullish mood evaporated in minutes and small caps fell as investors looked for guidance and were unsure which way to go.

One of the biggest losers is Progenics Pharmaceuticals, Inc. (Nasdaq: PGNX). The Tarrytown, N.Y.-based company is seeing its share price halve on news before the opening that late-stage drug clinical trial has failed.

During an afternoon conference call, Gulfport Energy Corporation (Nasdaq: GPOR) executives said they are optimistic the gas exploration company will achieve its expectations of a large increase in oil production.

CEO Jim Palm said the company continues to expect total oil production in the range of 1.7 million to 1.9 million barrels for the year ending December 31, compared with 0.87 million barrels in 2006.

An analyst on the call was concerned the company is running behind in production.

“It’s a pretty broad range,” Palm said. “But we’ll continue to evaluate [our guidance] and at this point in time, we’re not ready to change it.”

Before the opening bell, Gulfport reported second-quarter net income of $9.6 million, or  $0.26 a share, compared with $7 million, or $0.21 a share, in the year-ago period. Revenue for the three months ended June 30 surged to $25 million, up from $14.4 million during the same period of 2006.

The firm drilled 11 wells in southern Louisiana during the quarter. Two wells are awaiting completion and two wells are in the process of initial completion, the company said in a statement.

Gulfport reported it owns a 25% interest in the Oklahoma City-based oil exploration company Grizzly Oil Sands ULC, which is planning an assessment of its acreage in the Canadian winter 2007-08 drilling season and intends to drill between 100 and 120 holes.

A gusher of positive news has sent shares of Gulfport Energy Corp. (Nasdaq: GPOR) sharply higher in recent weeks. Just as motorists have found that pump prices have remained well above $2.50 a gallon since spring, Gulfport’s stock price is showing no signs of dropping back into its former trading range.
 
In fact, Gulfport’s share price is sending its market capitalization right out of the small-cap arena. Still, there could be some buying opportunities if there’s a market pullback – or, more likely, profit-taking by the patient investors who stuck with it. 

Gulfport Energy is an independent oil and natural gas exploration and production company based in Oklahoma City. The company, founded in 1997, has its principal producing properties located along the Louisiana Gulf Coast, along with some exploration activity in the Canadian oil sands and a smattering of activity in Thailand. As of Dec. 31, 2006, the company had 23.2 million barrels of oil equivalent of proved reserves.

Until the Gulf Coast was ripped apart by hurricanes Katrina and Rita in 2005, Gulfport Energy was truly a small-cap stock, trading in the $2-$5 range. Then it began taking off, riding the wave of a production fall-off and soaring oil demand.
 
The global demand for commodities, especially petroleum products, has helped push Gulfport Energy out of its stock trading rut, seemingly for good. In May, the company was listed among the top 100 growth companies compiled by BusinessWeek. Just as the big boys in the oilfields have seen their profits soar along with oil prices, Gulfport Energy’s profit has increased 308%, on average, over the past three years, BusinessWeek noted.