Becoming Bullish again on Owens-Illinois (OI)

Current Price: $40.00

The fears of raw materials (natural gas) compressing margins has proven to be overstated with the pullback in the commodities. Natural Gas hit a high near $13.50 at the time the conference call was taking place. Today, NG almost hit $8.00- this extreme pullback was almost unfathomable. However, OI hasn't rallied yet.

Looking at Crude Oil and the steel names, there maybe a short term bounce in commodities, but I do not see Nat Gas nearing those level anytime soon. Time to scale back in.



On top of the recent pullback, there has been insider selling recently within Owens-Illinois.
In August, insiders bought4,265 shares for $178,577. Not as large of a buy as I usually like to see but better than nothing.

The Financial Saga Continues....

I haven't posted in the last couple days because I have been swamped at work but it can be summed up really quick.

The dollar rally results in a commodity crash. Dollar is rallying because of relative weakness of other countries. As oil crashes, the financial and the Dow have been rallying. On top of that, Jim Cramer thinks that we have hit a bottom on July 15th. I think we need to retest that low to be sure-this is not the time to buy. I will never buy into a rally this strong.

The market is telling me the financials are going down again. After a couple days of the super squeeze, the financials have failed to make new lows. Now, the golden boys, Goldman Sachs (GS) and J.P. Morgan (JPM) have been downgraded big by some of the biggest names on Wall Street.

I think that Wachovia (WB) is the stock that has over-rallied most.

The Financial UltraShort (SKF) is up 9.60% at the moment to $121.30

With the fallout of commodities, solar names have taken a hit too.

First Solar (FSLR) is down to $250.17, about $50 lower since my short call.

Quanta Services (PWR), Trinity Energy (TRN), Zoltek (ZOLT), and SPX Corp (SPW) have all been hit very hard by the solar fallout the results from the Crude Oil plunge. However, crude oil may be closer to a bottom than the top right now. The oil stocks have lead the commodity down, however, the stocks have been flatish last couple of days. Nonetheless, we now have a real top in Oil ($148-150).

Luckily, this commodity bust has caused a retail rally. Home Depot (HD - my first call for this blog) has called almost 35% from its low. Currently trading at $27.60. Another powerhouse I want to mention is Wal-Mart (WMT), which reported "disappointing" same-store-sales recently and taken a hit. The stock had fallen from its 52-week high and that was the perfect buying opportunity. It has already recovered from that large down day.

Lastly, I want to talk about infrastructure. These stocks have probably been some of the most hard hit stocks in the S&P 500. McDermott (MDR) is down about 15% after earnings, while Foster Wheeler (FWLT) and Flour (FLR) are near 52-week lows. These companies do much more than petrochemical projects and many projects are based off of $70-90 oil. These NEED to be bought- they are just too cheap at these levels.

Commodity Stocks Crescendo Fall- AGAIN

Everything commodity related is being completely thrown out today, although, there is a bit of bottom fishing right now.

Crude Oil falls $3.97 to 116.21

Natural Gas falls $0.21 to $8.35

Gold, copper, silver, corn, and soy beans are also down.

The Oil & Gas UltraShort (DUG) continues to plow higher to 39.40

Here is a list of of commodity related stocks that I follow and their LOD prices

Potash (POT) hit a LOD of 169.00
Monsanto (MON) : $103.50
U.S. Steel (X): $135.23
Cleveland Cliffs (CLF): $85.33
AK Steel (AKS): $50.41
Freeport-McMoran (FCX): $82.01
Companhia Vale (RIO): $25.44
Transocean (RIG): $126.57

Interestingly, AGCO (AG) is up today even though agricultural and steel names are down. The market is telling me that grain prices are still high enough for demand to continue while the drop in steel can help accelerate, or at least maintain, the margin expansion story.

The margin expansion play may be the story behind the rally in Caterpillar (CAT) and Terex (TEX)

Also, Boeing (BA) continues to show strength after the Quarter. BA is up to $66.29- 2.29% today

Foster Wheeler (FWLT) and Quanta Services (PWR) Beat Earnings!

NEW YORK, Aug 6 (Reuters) - Engineering and construction company Foster Wheeler Ltd (FWLT) posted better-than-expected quarterly earnings on Wednesday, but said its power plant business in North America was slowing.

The company also announced that Chairman and Chief Executive Officer Raymond J. Milchovich would retire next year.

Net earnings climbed to $160.8 million, or $1.11 a share, from $71.9 million, or 50 cents a share, a year earlier.

Excluding an $18.3 million asbestos-related gain, the company posted quarterly earnings of $142.5 million, or 98 cents a share, topping analysts' average forecast of 84 cents per share, according to Reuters Estimates.

Revenues rose to $1.7 billion from $1.19 billion.

Foster Wheeler said its engineering and construction group booked $538 million in new orders during the quarter, bringing its backlog of work to $1.8 billion at the end of June, up 26 percent from a year earlier.

But its power group added $191 million in new orders, sharply down from the $550 million booked in the year-ago quarter, as North American customers deferred prospective projects because of increased environmental scrutiny, rising costs and fears about the economy.

Backlog at the power group stood at $1.5 billion at the end of the quarter, up 10 percent from a year earlier.

"In our (global power group) -- consistent with our guidance at the end of the first quarter of this year -- we are seeing delays but not cancellations in some North American prospects," Milchovich said in a statement.

The company would seek to offset that slowness by focusing on markets outside North America, he added. (Reporting by Matt Daily and Euan Rocha; Editing by Lisa Von Ahn, editing by Dave Zimmerman)

http://www.reuters.com/article/marketsNews/idINN0641671120080806?rpc=44&pageNumber=2&virtualBrandChannel=0

Utilities contractor Quanta Services Inc (PWR) posted a better-than-expected quarterly profit, and forecast strong third quarter revenue.

For the second quarter ended June 30, net income was $40.5 million, or 22 cents a share, compared with $21.9 million, or 17 cents a share, a year ago.

Before items, earnings in the latest quarter were 26 cents a share.

Revenue rose 74 percent to $960.9 million.

Analysts on average were expecting earnings of 24 cents a share, before special items, on revenue of $903.0, according to Reuters Estimates.

Pro forma internal revenue growth was about 20 percent compared to the year-ago period, Chief Executive John Colson said in a statement.

In July, Quanta, which installs and maintains network infrastructure including electric power, gas, cable TV, and telephone and data lines, acquired Winco Inc, a helicopter services company.

For the third quarter, the company sees earnings of 23 cents a share to 26 cents a share on revenue of $1 billion and $1.04 billion.

It expects earnings from continuing operations, excluding items, to be between 27 cents and 31 cents a share.

Analysts were looking for earnings of 30 cents a share, before special items, on revenue of $967.0 million.

Shares of the Houston, Texas-based company closed at $30.66 Tuesday on the New York Stock Exchange. (Reporting by A.Ananthalakshmi in Bangalore; Editing by Bernard Orr)

http://www.reuters.com/article/marketsNews/idINBNG5472820080806?rpc=44&pageNumber=2&virtualBrandChannel=0

Notable Stocks of the Day 8/05/2008

Boeing (BA) is rallying today on falling oil prices. The stock is up 5.04% to $64.45.

Black and Decker (BDK) has been trending fiercely up since about a week before the stock reported earning. After hitting a 52week low of 51.56, stock started moving up. Today, BDK is up 4.25% to $61.01. I keep wanting to recommend this stock on weakness and have not seen a big down day.

Wal-Mart (WMT) and other retailers are rallying with the decline in oil. WMT is up 2.40% to $59.84. I am very impressed with WMT on a operational level but the stock has failed to break $60.00 repeatedly. However, with the decline in oil and growing strength of today's uptrend, it may do so this time.

Otter Tail (OTTR) reported poor earnings and lowered guidance. The stock is down $9.20, or 21%, to $35.70. This decline shows how crowded and over-optimistic investors are about any alternative energy.

Oil Continues to Falter

The Oil & Gas UltraShort (DUG) hits $39.89. This ETF is up over 20% since my call and I have to continue recommending taking more profits.


Overall, this commodity fallout has been viscious- many commodities are at 4-6 month lows. Commodity stocks have been just getting killed, even agricultural stock.

Here is a chart of Monsanto (MON)- just looks painful.


Today the commodity stocks are moving up, opposite of the trend, so we need to be careful about this being a fool's rally. I believe there is a very real possibility that commodities can overshoot their fundamental to the downside as they did to the upside if we keep hearing poor news about emerging markets. This means that exposure to steel stocks should continue to be cut.

Although, I am now becoming bullish on Natural Gas. This seems to be one of the most beaten up commodity sectors and I believe Nat Gas will become a more of an Crude Oil alternative due to the lower BTU price.

Chesapeake Energy is down about 40% in a matter of weeks.

Sell MasterCard (MA) and More!

Current Price: $233