discussed with this group!
Register for free to join our community of investors and share your ideas. You will also get access to streaming quotes, interactive charts, trades, portfolio, live options flow and more tools.
Register for free to join our community of investors and share your ideas. You will also get access to streaming quotes, interactive charts, trades, portfolio, live options flow and more tools.
Idea for new investors!
Chesapeake will be the best buy of the year if natural gas outstrips production. I found something that Forbes published that is astonishing. The article is called, "The U.S. Natural Gas Export Boom Means Pipelines and LNG." You can read it here;
http://onforb.es/1R1Nvus
Here's the way I see buying 100 shares of CHK at the current price of $4.10: First, put in a stop-loss at $3.85. The most you can lose is $25.00 plus fees. It's been oversold and hit with a barrage of negative news that is all blown out of proportion. This will pass within a few weeks and stock is sure to ease back up to $6.00. This will represent a 45% return in 30 days, or $190.00 profit. Make up your mind if you want to hold for more gains. If the Forbes article is correct, CHK will likely hit $30 in 2 years. You'll make close to $3000.00 on you small bet. Of course, invest $300 and you make 3 times as much and only stand to lose $75. If you decide to stay in, keep easing your stop-loss up as the price rises. Your $300 could become $9000!
Volume and Share Price!
Fridays volume was 28 million verses and average volume of 48 million.
What can you learn from this?
Rule #1: For a price move to be valid, the price action must be confirmed by volume. You cannot trust big price moves on low volume!
A word about manipulation. It is easy to manipulate a stock that is a little shaky when its volume is low. All a manipulator needs to do is release some terrible report on a questionable stock, right or wrong makes no different. Then he starts selling short to create the illusion that the stock is falling on his bad news. He wants investors to stampede toward the gates. The trick works both ways. The goal is to raise the price if he wants to sell and to lower the price if he wants to buy.
The party in the best position to manipulate a stock in the market maker. He likely has a computer logarithm set up looking at all the buy and sell orders. The computer knows exactly when to sell heavy into the bid to knock the price down and scare all the novice traders into selling out. His goal is to run the price down as low as he can and then start accumulating shares to cover his short. If he does everything right, he could end up with millions of cheap shares.
The next step is to switch over and start buying a bunch of shares at market and run the stock up as quick as he can. The stock moves higher and catches shorts and moves even higher quickly. Lots of previous sellers think this is the turn and jump on. He then dumps the cheap shares he bought and the stock slowly moves back down again. He will keep milking the price over and over until it no longer pays off.
Keep in mind that the computer sees all the buy bids and sell offers. It knows everything going and is programmed to move accordingly to maximize profits.
I am almost willing to bet that Barclays is a market maker for CHK.
Lots of day-traders, myself included, will play the game right along with the manipulator. But you really need to be experienced at reading the play by play or you get your head handed back to you on a platter.
CHK has been up and down maybe 8 times since this raid began. I know the game and I am now trading it. It's really the only way to stop the bastards. I even think they may have stopped already because volume was only 28 million shares Friday.
What are they going to do next?
There next move might be to hold their cheap shares and let the stock price run up to much higher levels and then slowly sell the shares they stole at big profits. Whether they will pump and dump anymore can usually be spotted by tic by tic trading patterns, but you need an eye for seeing computer trades,
If Barclays is CHK's market maker or has close ties with the real market maker, I would advice novice to buy and hold until your recover your losses and then I would get out of this stock. Barclays will keep on pounding CHK into the ground if given a chance.
I'm now holding a lot of shares and can play the game with them. I can easily day-trade CHK all the way down to $1 if that what they want to do. I'll also bet that many other day-traders are in on what's going now. If I'm right, CHK will likely slowly recover from here because the day-traders will take a lion's share of their would-be profits.
One other legitimate move I should share: If a major investors wants to take a strong position, he will often have his buyers start out by the shorting shares to run the price down quickly. Then he will start accumulating. So watch out for sudden price drops on no news; they could signal a move up.
From what I hear, CHK has already hedged 2017. By the way, if they price goes above the hedge, they get the extra money but still need to pay the fees.
The hedging was necessary to secure the $4 billion line of credit. The credit in made available without audit until June 15, 2017 so we have plenty of time to ramp up production and pay down debt.
The new CEO (Lawler) is a genius at increasing production and field operations. That's what he did at Anadarko. He knows his stuff. He is already increasing horizontal reach out to 10,000 feet from 7,500 feet. His call to fame in gas field management and he has brought in many of his own people. Chesapeake has the best productions crews in the world.
They just expanded far to fast in 2011 and 2012. The founder of CHK was a big time gambler and half con man. He took some huge risks and then along came the warmest winter in history. If the El Nino had not have hit them, CHK would be flying high. The board fired the guy in 2013 and hired Lawler.
Obviously,all the major stock holders are convinced that leaving their investments in CHK is their most profitable decision. Otherwise, you would see share volume double or triple normal. Instead share volume has never exceeded average since this sell off (manipulation) began.
Last Friday the volume was 28 million compared to an average of 48 million!
Heather, it looks like volume today will be down 50%. Its hard to believe that this sell off occurred and not one loosing day did we see the volume reach normal. There is only one way to explain and that is market manipulation. If you want to do us a favor try to find out if Barclays is a CHK market maker.
Anyway, the low volumes tells us the selling is over with. Who ever pulled this deal is buying as many cheap shares as they can. And, then they see to it that the price runs back up to above $6 before they start dumping again. I'll be there with you. We will both sell out as soon as the first sign of strong selling pressure. Then we'll wait until it bottoms again and then jump back in. Believe me, there are ways to turn this beating into a top money maker.
I'm averaged down to $4.19 now and will trade this stock till I get to at least $4 or less. Then I'll load all I can and walk away and forget about it. By January 2018, this puppy will be selling for $30 --- it can be no other way! The new CEO (Lawler) is a genius at increasing production. He knows that part of the business better than anyone alive. This is his first big chance to show off. Chesapeake will be greater than it ever was in two years.
There is plenty of troubles that have be straightened out, but there is nothing that can't be fixed. It will be volatile, but you will make money. Beaten down high-flyers usually make the most money. This stock used to sell for $60. You now own it for $6. Everything will be great!
Brent 5 cents away from $48.00!
The rig count hit its 50 year low at the end of April 2016
I expect to see some buying start any minute now.
Funny thing also is that we are more than half through the day and only traded 18.5 million shares. Normal volume is 48.5 million. Unless volume picks up, we will miss average by 10%.
I just don't understand why the major share holders are not scooping these cheap shares. They are certainly not selling their holdings, but you think they be happy to add some cheap shares. Maybe there are rules about chasing a stock going down?
That not true erdos. Flipping this stock right now is hurting the manipulators and preventing him from running it into the ground. I just bought another 10K at $4.05. If no one was buying, the ones doing the manipulating would run Chesapeake down to $3.75 or lower. That we are buying on the dips and selling for 10 cents profit is cutting into the bad guys income. This will run him off in due time.
If the price would rise and stay there, I'd be foolish to day-trade. But as long as the stock keeps drifting up and down, I will keep buying at the bottom and selling when its tops out.
The best thing happening now is that Brent is within 30 cents of hitting $48 per barrel. And WTI is holding just above $46. The is the right spread between Brent and WTI. Even a little good news would send both WTI and Brent into yearly highs.
I called my broker to see how his research depart felt about CHK. He told me that shorts could not margin the stock but longs could down to $3. In other words, my broker is betting the stock will increase in price, but taking no bets on the short side.
I agree. I just flipped my 2nd 10K at $4.18 so I'm ready for the jackasses to run it down again. It's down 2 cents already. if it drops more, I do the same thing. I should have been day-trading from the start but I was a little scare because I never day-traded CHK much.
If this was SWN, I be trading all day long. It all depends on who the market makers are and how they manipulate the bid and ask numbers. You got to know the habits of the these swindlers.
I see its down now to $4.14 so I'll go back in again for another 10k. I'd like to average down to $4 if possible. I'm at $4.22 right now all the way down from $5.60.
NatGas moving back up... only down 1.8 cents
we need one big buyer to step up to the plate and we could run up nicely. I don't think Barclays is gonna beat CHK down any lower then $4 before the major share holders put an end to things.
It will be an interesting day.
I wish someone could find out who are CHK's market makers. I would be surprised in Barclays in not involved.
They hit hard at open and then reversed and started buying back. The got a few million shares bought now they back off and hit again to scare investors a little more and then they buy again. I've seen these action so many times.
I picked up 10K and $4.02 and sold them at $4.20. Now I'll wait until they run it down and then we go again.
The volume is running along average at 5 million for the first half hour. No real buyers but I think they will come later in the day.
Just picked up 10K at $4.02 again. I do not believe the price will get much cheaper before some bargain hunters set up to the plate.
What I can't understand is why are the major share holders letting this continue?
Anyway, I gonna try to day trade this volatility and lower my share average to under $4
Barclays is setting it up for a hit. someone just dump 10,000 shares at market value on premarket. No one but a manipulator would pull a stunt like that. The price touched $4.04 I had pulled my bid for 10K shares only 10 seconds before they dumped. They would not have slammed premarket with my 10,000 share bid because it would have done little to knock the price down. These are some really sick, greedy bastards. The slam didn't work. Pre-market popped back to $4.12 right away.
I blame the SEC.
They investigated my back in 1995 for market munipulations. What a joke it turned out to be. I walked out in the middle of the meeting and told them to file their case or kiss off. They were after me for posting positive comments of the yahoo stock board and want to examine all my trades. I laughed and walked out the door. Never heard from them again.
The SEC knows whats going on now... they are getting kickbacks left and right. I'm so glad Trump is running for president. Our government sucks!
The positive article is linked.
http://seekingalpha.com/article/3974838-analysts-wrong-now-wrong?app=1&auth_param=1191vj:1bjbfkh:f8a910042647bcc2d4caff5193e95f75&uprof=44&dr=1#alt3
I agree 100% with this guy! There is a shortage of NatGas coming in about 6 months. An El Nina is on the way. It will bring a lot of humility, which is what drives air cond. use more than heat.
yes, crude is down but Brent is still above $47 and WTI is above $46 --- this is high enough to raise shares of this dirt cheap stock, not lower them. I just put in a bid to buy another 10K in pre-market.
The EIA bumped up Henry Hub natural gas forecasts to $2.25/mmbtu for 2016.
2017 looks even better. LNG and Mexico exports are expected to increase by 15%-20% by the end of 2016. A hot humid summer and a cold damp winter this year will lower natural gas storage to five-year averages and gas will hit $3/mcf by January 2017.
As demand continues to rise, many gas wells will be exhausted by January 2017. Rig counts will need to rise drastically but this ain't gonna happen fast enough due to the state of disrepair in stacked rigs and the limited number of rigs that can drill the 10,000-foot lateral holes producers want.
Everything points to the PERFECT STORM for gas production. Prices will likely rise above $3.50/mcf by Christmas 2017, 18 short months from now.
This will put Chesapeake back in the black and run the stock up to $30 per share going into 2018.
I remember looking at Apple shares at $9.00 when everyone was predicting it would fail. I wanted to buy 20,000 shares but didn't have the nerve to go against all the doomsday preachers. I watch it rise to $15 and still didn't have nerve to go against the crowd. I'd be a billionaire now if I would have followed my instincts.
I also recall another famous saying -- buy when everyone else is selling.
I had a rough year in the patch and need a big winner. All my logic says that winner is Chesapeake Energy. The big reason is that the stock is beaten down on below average volume. Not once have I seen this stock drop on above average volume.
By the way, today is Friday the 13th! I don't expect any upside today because crude and gas are both down. Even so, the numbers are still high. WTI @ $45.14; Brent @ $47.64; gas @ $2.09 These are still respectable numbers.
positive article on Chesapeake!
http://seekingalpha.com/article/3974815-chesapeake#alt2
wormwood, it's difficult to understand why CHK dropped 4.3% with 42 million shares sold when average volume is 48 million. One would think that the major share holders would be willing to step in and average down their share price.
On the hand, maybe they are smarter than I give them credit. They see the clear manipulation going on at Barclays so maybe they are waiting until the share price moves lower. Then they pile on and run the price back to where it should be, catching the shorts in a squeeze. That would be fun.
KEEP IN MIND: When share prices get beat up for more than a few days and volume never exceeds average, something strange is going on. The only time we've seen higher volume was when the price increased. Volume would certainly double if the major shareholders were worried--there over 300 million shares outstanding. If these 300 million shares are not worried, why should I worry?
Somebody around the table is holding a pair of aces in hole with a pair of kings and an ace on the river. In other words, the majority of professional share holders must be content to hang in there.
If you are really smart, you will ride this puppy until the share price drops on a doubling of volume.
As I said in a different posts, the number of rigs working hit a 50 year low at the end of May 2016. Even if producers wanted to start drilling like crazy, they could not do it because a lot of rigs are non-working right none and there is a dire shortage in rigs capable of drilling the 10,000 foot lateral holes that are now needed. There has to come a day of reckoning. NatGas and crude will have to spike up drastically to get the industry back on its feet.
I just sold all my other shares and plowed everything into Chesapeake.
This is really weird. I guess small-time traders are not allow to know who is screwing them anymore? The bullsh_t is getting really deep.
Here's another surprise: Oil is up and CHK is under $4.10 and volume is extremely low. I'll bet my last dollar that Barclays is the market maker for Chesapeake.
If you look at the internet news you will see that Chesapeake presented at Barclays conference. I got a feeling we are being set up! The major share holders ARE NOT selling---their no volume. Why are they holding as the stock drops to under $4.00. They should be buying more shares or selling out.
I have never witness anything to compare with what is happening now!
It might even be that Chesapeake is setting us up for a fall! I think someone in the states should contact the SEC and tell them the craziness going on. I would but I am in Asia now.
I close my Scottrade account.
Now the manipulators short the stock when oil and NatGas are both in the green. This is so damned disappointing.
Need Some Help!
Can anyone good at research find out who the market makers are for CKH? If you have level 3 quotes, the market maker initials should be listed. If you give the initials I can find the market maker. I got a suspicion that Barclays is one of CHK's market maker. Please tell me I'm wrong!
This is manipulation at its best. In my 30+ years of trading, I have never seen so much crooked maneuvers and scams. The stock market is gonna put itself out of business. Too f__king many crooks. There is no support under this stock, but there is no volume either. This means the major share holders with deep pockets are standing back and letting the crooks eat the little guys alive. But CHK still is a money maker over the next two years for those with guts to stick it out. I have double down again at $4.15 so I setting pretty. I been through this kind of sh_t before many times. You must set back and let the shorts and manipulators have their fun. A major buyer will come along soon and burn these bastards. I sure wish I have the money; I'd buy 50 million shares right now if I could.
All this manipulation is designed to cause you to give up and sell out your shares to Barclays and pals. Don't do it. Take the pain. I can see these bastards setting around in a circle jerk laughing their ass off.
The only honest traders trading the stock now at day-traders. They are all over CHK due to its volatility. 80% of today's volume is day-trader churn.
Crude will break into the green later today so don't give up the ship!
I wrote an positive article for Seeking Alpha But I don't they will publish it since all they seem to be publishing is negativity.
Just hang tight, Barclays will start buying their short back and we should could some more buyer at about 1:15 pm after they finish a martini lunch.
Here's another shocker, both BSO (Brent ETF) and USO (WTI ETF) are up but futures for WTI and Brent are down. That's hard to believe.
The drilling rig count tells the story.
Since 1940 the highest weekly US rig count was 4,530 recorded on December 28, 1981. The lowest U.S. rig count ever is 415 rigs recorded 6 days ago. In other words, the rigs working in the US are now at an all time low! Based on rig count alone, demand for NatGas and crude will outstrip supply really fast and catch everyone by surprise. Cap-x spending is the lowest it has ever been and look like it will stay low until the demand exceeds production by a large margin. In such a case, production will not be able to ramp up fast enough causing WTI to spike to $80 and NatGas to $4.00 for a mini boom in the oil service sector.
One last point: There are simply not enough modern horizontal drilling rigs available to raise production and catch up with demand. And, drillers have had to cut prices to the bone to keep a few rigs running. Their equipment has been beat to hell and back. Lots of stacks rigs will take 6 months of repairs before they go back to work. Pumps, parts, and motors have been salvaged to supply parts for working rigs. Laid-off employees have all gone to work at other places so there will be a worker shortage. In other words, drillers are gonna have a hard time getting back to speed when this market turns.
And, Donald Trump will likely slap OPEC with a 20% import tax, which will be the same as putting them out of business!
Investors missing the truth!
Chesapeake's hedges for 2016 and 2017 are not helping the stock because most don't know about them. I doubled yesterday at $4.18 and dumped the new shares when the price started to slide. I hope the shorts jump on CHK and run it down to $4.25. I will double again and day trade this puppy until the shorts learn their lesson. No more trying to rally Chesapeake.
I did submit an article to Seeking Alfa but I don't think they will publish it. All they seem to want on Chesapeake stock in negativity! I have never seen a stock beat up as much as CHK. It speaks well for the fundamental that the stock is slowing edge back up during such a beating by all the idiots that obviously did not read the 1Q16 conformance call transcripts.
I disagree. I think CHK under $30 is indeed a bargain. Doubt me? Stick around for awhile and learn something!
By the way, if CHK under $5 is no bargain, what are you doing here?
Shorts getting squeezed now! Can you imagine the knot if their stomach as this puppy keeps on climbing. I knew there was a strong run up coming. I will not be surprised it is runs to $5.00 or maybe even more. The volume is not to high so there is not a lot of panic. But it really take off if NatGas starts climbing!
And, I doubled down this morning at $4.14 so you know I'm happy!
crude and gasoline inventories down big!
I doubled down myself. Volume is still below normal so I don't see any major holders running towards the exits.
It looks like a computer logarithm is trading CHK. The price of gas and oil futures and weather and etc are all likely programmed in.
So, I think we a stuck to current prices of oil and gas until a lot more investors learn about the hedges.
Crude inventories and gasoline inventories down big so here comes a bump!
CHK: the next 10 days...
The Saudis, Bloomberg's, and other market manipulators are trying to beat down crude prices so this is a big negative. They will keep up the negativity until oil drops. This will bring out a lot short sellers trying to daytrade CHK. Volatility will return.
On the other hand, Henry Hub natural gas prices will average $2.25/MMBtu for the rest of 2016 according to the Energy Information Administration (EIA) forecast.
I think this number is closer to $2.35 because the weather taking shape favors a hot humid summer. Humility drives the use of air conditioning more than heat. Damp weather at night also drives heating demand. On top of this, a lot of oil money will go into NatGas since it appears to be a safer bet going forward. Those that play the oil and gas patch don't like to bet in other markets.
The weather forecast over the next 10 days also looks perfect for NatGas. There are hot humid days in 70% of the US and cold damp nights in 70%. This will boost electric demand during the day and heating demand at night. https://weather.com/maps/tendayforecast
I also think that investors are beginning to see Chesapeake's strong hedges especially in oil at $46.36... if i'm right a lot of money will pile into CHK.
Still, I am expecting some knee jerk selling pressure and maybe another hit by Barclays and Barrons. I hope so because I did not double my bet yesterday. I will do it on the next dip. I might even pull some money out of UNG and double down again.
I believe NatGas will be selling for $4 in January 2018. The main reason is because their is a serious shortage of modern horizontal rigs needed to drill the long holes that produce large qualities on NatGas. Prices have been so low so long that active drilling rigs have been cut by 80% for a long time. With gas under $2, a producer can not afford to drill. Besides, oil and gas has always been bust and boom. We just came through the bust--the boom always follows. To think that the recent bust will transition into "normal" market prices is nonsensical. Normal conditions in the oil patch only last for 3-4 months!
Chesapeake production:
I took this from the transcript of 1Q16 earnings call.
Notice that CHK is supposedly producing 1.8 billion cf of NatGas per day in the Marcellous play. Their NatGas is hedged for $2.71 per million cf. 1.8 billion is 1,800 million so this means their gross sells from just the Marcellus will be about $4,878 million dollars per day from just this one field. Add to this another 1 Bcf that they have in reserve and you gross for Marcellous alone is 2.8 Bcf per day or about $7,588 million per day in gross sales. (about $7.5 billion per day from one play)
Somebody go there and study this statement... Maybe I'm reading it wrong!
"Hey, Brian. This is Frank Patterson. In the Marcellus, we're making about 1.8 Bcf a day. We've seen a little bit of uptick in price recently, so we're doing well there. We have about 350 million cubic feet a day curtailed. These are wells that we can ratchet up as the market allows. And we have about 200 million cubic feet a day on wells that need minor repairs to bring back on line. So a substantial amount of gas available to us at a very, very minimal cost associated with that. And we'll manage that as the market allows."
"We have about 100 wells sitting back waiting to be fracked. So that would give us another 450 million cubic feet a day. So we have a little bit over a Bcf a day available to us at a pretty reasonable cost."
V\http://seekingalpha.com/article/3971811-chesapeake-energy-chk-robert-douglas-lawler-q1-2016-results-earnings-call-transcript?page=4
Volume up 20 million shares! Price up 5%!
This is the very powerful buy signal I expected. I like to repeat a post I made earlier by taking some copy from the IQ16 conference call.
From page #3 of the transcript:
"Since we last spoke to you in February, we've layered on additional hedges for 2016 to help increase our cash flow. We have approximately 476 Bcf of our remaining 2016 gas production hedged at $2.71 and approximately 18.2 million barrels of our remaining 2016 oil production hedged at $46.32 per barrel, representing 64% and 69% of our Q2 through Q4 2016 gas and oil volumes respectively. We have also started to add some 2017 hedges at recent prices."
http://seekingalpha.com/article/3971811-chesapeake-energy-chk-robert-douglas-lawler-q1-2016-results-earnings-call-transcript?page=3
Read it 3-4 times until it sinks in! Sixty-five percent of CHK production for 2016 are cover by powerful hedges. This means that management is not making decisions in the dark. They know the price they are going to get before they spend money. They can figure their profit on the back of a napkin.
I am also told that they have already hedged all of 2016 and trying to hedge 2017. If they get this done, running production will be easy. All your decisions will be profitable if you know your lifting cost, your transport, and your selling price. This frees management to concentrate on other ways to improve the bottom line. They are also negotiating with the pipelines to make better deal. They will be able to squeeze all their suppliers and everything should go as planned. This will also attract a lot of investors and will increase share prices drastically.
Lots of companies have made the wrong decision and ended up in trouble. Many of them have restructured and come out of their troubles stronger than ever. This is why CHK's banks extended their $4 billion credit line for 2 years without audits. Think about it. The bank gave them a $4 billion credit line and gave up the privilege to audit them for 2 years. This is powerful stuff. It means that CHK has 2 years to clear things up with worry about credit and without worry about where the oil or gas market might go.
Considering that CHK was selling for $62 in 2008 and now selling for $4.30 (with all the above guarantees) turning you thumb down on this one seems really stupid to me. One other point, CHK is no longer paying the 8 cent dividend they were paying last year. That's a 200 million annual savings.
See my next post for mind-blowing production numbers!
Here's some copy for the investor's meeting.
"Since we last spoke to you in February, we've layered on additional hedges for 2016 to help increase our cash flow. We have approximately 476 Bcf of our remaining 2016 gas production hedged at $2.71 and approximately 18.2 million barrels of our remaining 2016 oil production hedged at $46.32 per barrel, representing 64% and 69% of our Q2 through Q4 2016 gas and oil volumes respectively. We have also started to add some 2017 hedges at recent prices."
http://seekingalpha.com/article/3971811-chesapeake-energy-chk-robert-douglas-lawler-q1-2016-results-earnings-call-transcript?page=3
Notice that CHK has a potential to produce a billion cf per day in NatGas. This is a powerful number that will bring in gross sells of about $13 trillion, 550 billion dollars a day in gross sales.
"Hey, Brian. This is Frank Patterson. In the Marcellus, we're making about 1.8 Bcf a day. We've seen a little bit of uptick in price recently, so we're doing well there. We have about 350 million cubic feet a day curtailed. These are wells that we can ratchet up as the market allows. And we have about 200 million cubic feet a day on wells that need minor repairs to bring back on line. So a substantial amount of gas available to us at a very, very minimal cost associated with that. And we'll manage that as the market allows."
"We have about 100 wells sitting back waiting to be fracked. So that would give us another 450 million cubic feet a day. So we have a little bit over a Bcf a day available to us at a pretty reasonable cost."
V\http://seekingalpha.com/article/3971811-chesapeake-energy-chk-robert-douglas-lawler-q1-2016-results-earnings-call-transcript?page=4
I dumped SWN for $7.50 --- big stupid mistake.
I was daytrading CHK and doing okay.Then I caught caught in a market manipulation by Barclays. Been there done that many times before. I double up and the stock dropped even more. Then I started studying the company. I like the fact that most of their 2016 production is hedged at a good price so I decided to ride along. The more research I did, the more I became convince that this was another double in 90 to 120 days. I even see $30 in 2 years.
I been looking for a long term hold. I got a ton of UNG so I sold some and bought more CHK. I'm ready to sink 6 figures into this puppy and forget daytrading. I like the 2 year hedging and think this is the key to a big long term bet.
So where are you now girlfriend?
Volume is average, but price up 4%.
Volume hit 21 million shares after 3 hours of trading. Average volume is 7 million shares per hour. In other words, we have average daily volume and increasing share price which is extremely positive.
Most investor do not know about Chesapeake's hedges. When they find out, you can bet that this stock will work its way back to $6.
What Wall Street is Missing!
Chesapeake made deals with its bankers to extend a line of credit for $4 billion for 2 years. Normally creditors can come back every 6 months and re-evaluate the credit line and withdraw it if they are nervous. But not CHKs deal! Chesapeake's agreement is good for 2 years without being re-evaluated even one time. This gives the company until spring 2018 without fear of losing its line of credit and being forced into BK.
To close the deal, Chesapeake hedged its 2016 gas production at $2.71 and its 2016 oil production at $46.60, pledging the hedge as collateral. In other words, they pledged their entire production. This means that buying CHK carries a hedged guaranteed price for its production. All Chesapeake has to do now is pump all they want without fear of making a mistake. NatGas can go to $1 and WTI drop to $10 and it makes no difference to any management productions decision. This is powerful.
This also means that the bouncing up and down of the share price is meaningless over the next 6 months. Furthermore, the bouncing up and down of oil and gas also means nothing to the final outcome of this 2 year deal. In other words, buy this stock and put the shares under your mattress and don't worry about them until spring of 2018.
Notice that the volume the last 3 days is no more than average. This tells you that the major share holders privately approved the finance deal before it was even made. In other words, if the major holders are not in a panic, you should not worry either. And, you can bet that management is in touch with these whales on a daily basis. On the other hand, if you see the stock fall and volume run up above 150 million shares a day, then you can panic. No strong increase in volume during a falling share price is nothing more than manipulation.
I believe Wall Street is asleep on this one. None of the negative articles I have read mention the hedge. They all say oil is gonna drop and CHK fail, which is simply not true when your production is already hedged.
It will not take long before the Street realize that the banks that extended a $4 billion line of credit good for 2 years without the right to audit were not stupid. They made a safe bet!
I see CHK hitting $30 in 24 months!
Volume drops %50 from yesterday!
We did 10 million shares in the first 30 minutes yesterday, We did 5.6 million in the 1st 30 minutes this morning and the stock is up 3%. In other words, volume down almost 50% from yesterday and price rising. Sellers are not so worried about getting out. Buyers are taking their time buying in.
We did not get the strong pop I wanted but the volume is down and the price is up 3%. We need to take out a few more weak hands and then we will head up. I say we end up 6% higher at the close.
Pre-market up 5% but there is not too many shares to buy. Seems like most investors not willing to sell their shares so fast. My guess is that the day traders who bought in yesterday at around $4.10 are willing to take a quick 5% and run out. On the hand, there are some long-term players like me that will not surrender their shares for less than $30!
The 5% rise is fantastic for pre-market because new buyers are reluctant to purchase shares when the prices rise more than 5% before the bell. New buyers usually will wait until open and try to buy in a little cheaper.
There also seems to be a lot of traders that still don't know that Chesapeake has hedged 65% of its remaining 2016 production at $2.71 for gas and $46.36 for crude. They are looking to hedge 100% and even hedge 2017. Under the hedges, it makes no sense to buy or sell CHK based on the current oil/gas markets since their future is already bake in by the hedges. The hedging is what takes all the danger out of buying this stock.
To tell the truth, there are no reasons to even watch CHK trade. Best bet is just walk away and come back every 6 months to check on your profits.
I've also said this before, all of CHK's major investors have obviously approved the recent deals done by management. The proof is in the fact that volume yesterday did not exceed average daily volume.
One last point, Bloombergs' in trying to talk crude down. It does not make a damn where crude or gas trades since the hedges are already in place. This is just one of those times when you might have to do what the major investors are doing --- close you eyes and ears and let the market do what ever its wants.
The only thing you really need to worry about is a double in volume and quick fall in share prices. But I don't think this is gonna happen. The major investors are not stupid. They did not dump at $3 so why would they dump now. Besides, if the majors holders were going to sale, they would have started last Friday.
SHORT SQUEEZE IN THE MAKING!
Chesapeake could turn up like Saturn-5 rocket with a big booster! This will create a stampede at the buying desk and could catch a lot of shorts with their pants down.
Sure, there is a lot of reasons to hold off buying but if you wait thinking CHK could get cheaper, you could miss the opportunity of the year. One thing is for sure, when Chesapeake starts to move up, it will like a rocket to at least $6 maybe even $7.50 like it hit the other day. This was caused by short covering and could easily happen again.
Betting on beaten down high flyers on their way back up can make your entire year, especially if they have a large short position. Don't linger waiting on a better chance. A short squeeze could send this puppy to $10 on the first day! To clear the shorts will take at least 3 days at current volume.
If you are a small investor who is short, you better buy back now or you might lose your pants and your money. Now wouldn't that be fun!