Wade, re: "Ethanol stocks taking a breather?"
This past week they seem to have had an asthma attack.
Many of us expected a quick rebound after what seemed like a panic selloff, but it hasn't started yet. Perhaps the White House wanting to increase ethanol production will help.
I am out of both PEIX and REX at this point. Both were moderate sized positions for me. Hated getting stopped out of REX at 97 after buying at 107 just a few days ago. Sold the PEIX in the 23 area, so that balanced some of the REX effect on portfolio.
Though I like the near-term certain high profitability of ethanol companies, it is clear now that quick reversals in ethanol prices really hurt the ethanol stocks; so in that respect they do seem to follow the price direction of the underlying commodity.
Perhaps you unloaded at least a portion of your overweight positions in these two on the way down and can repurchase for a rebound when a bounce begins. But wait ... maybe you were selling a significant portion of your shares last week, thereby facilitating the drop in REX and PEIX?
I hope to repurchase PEIX and/or REX and play them again when it appears ethanol and the stocks have started a rebound. IMHO ethanol stock investor actions are more easily tied to ethanol price direction than to the slightly more complex "spread" direction.
Both PEIX and REX are making great profits in the current qtr, and they should do well next qtr as well, unless the "spread" tightens significantly. Any significant upward move in ethanol price should bolster both stocks since corn prices will probably be down for the rest of this year.
Do you have a strategy for profiting from possible continuing volatility in PEIX and REX over the coming weeks? Maybe wait to buy back til we get much closer to the next earnings report?
These two stocks appear to be a better buy now than they were two weeks ago, but uncertainty about future quarters may keep them down awhile.
You haven't commented much on these stocks in the last few days, so I'm curious how you responded to the selloff and your strategy on how to play these stocks from here.
Good luck!
Regards,
'peeker
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AI
