LNG Liquefied natural gas infrastructure, Sequenom up huge, SPY update

LNG or Liquefied natural gas infrastructure, SQNM and the SPY update

November 30, 2012

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This week - Billions of dollars for natural gas infrastructure and LNG are needed around the world for years to come… My, my how Mr. Market has changed in 2 weeks…. Position updates – SQNM up over 50% in 2 weeks making for a nice holiday present + AAPL, YPF, ZNGA, GLOG and ROSG…

 Last month the Federal Energy Regulatory Commission (FERC) updated their “Proposed/Potential” North American LNG Import / Export Terminal map based on updated company filings – see the LNG chart from FERC below.

I thought it would be an interesting point out for investors the magnitude of the construction spend we are approaching for LNG terminals – the estimated cost for each project is not included within the FERC chart.

Proposed LNG terminals – City – Estimated cost

  • Freeport, TX – $2 billion
  • Corpus Christi, TX – $10 billion
  • Coos Bay, OR – $4 billion
  • Lake Charles, LA – $6 billion
  • Hackberry, LA – $6 billion
  • Cove Point, MD – $4 billion
  • Astoria, OR – $6 billion
And recently moved from the “Potential to Proposed”
  • Sabine Pass, TX – $10 billion
Total estimated cost – about $48 BILLION in LNG – natural gas infrastructure is needed by 2015 – 2017 for the officially proposed sites (not the Canadian or the potential sites).   Absolutely enormous area for investment.  And remember – This list is ONLY the LNG plants being proposed within the United States.

LNG Natural gas infrastructure

How is your portfolio positioned to take advantage of this megatrend?

LNG terminals all need equipment manufactured by Chart Industries (GTLS) – A stock RulingTheMarket members could have made a significant amount of money in already. We currently do not have a position but….. we may soon – I update the trading blog with our favorite LNG stocks at least one time everyday. Just bookmark it now for easy access.

Our December Gold Member report (about 2 weeks away) will be about a company taking advantage of the LNG market.

Become a Gold Member here and be covered by our Gold Member Guarantee.

 Technical update – 2 weeks ago I wrote –  ”The politicians saved the day.. If we close next week above today’s (November 16th) spike high we would become near-term bullish”.  The SPY is up about 4% since then.  Additionally on Wednesday of this week within the trading blog I wrote “The SPY tried to break-down today and failed.  This is actually a bullish sign”.

You can see on the chart below (as of today – Friday, November 30th) the failure to break-down on Wednesday produced some bullish volume on the charts as well.
Stock market technical analysis, market timing

The daily chart is no longer fully bearish – and has now shifted into what I call the “confused stage”.

  • We still have a bearish looking daily chart (and weekly charts – not shown) with down-trending lower highs (yes the trend line was broken but not the pivot at 144).
  • Bullishly speaking, the SPY has challenged the 200-day moving average and bounced with bullish volume (up day volume is > down day volume). Additionally this week, the SPY failed to go lower at resistance on Wednesday which is bullish.

All of this = “confused”.

I plan to watch the market action for a bit longer (along with the economics and political rhetoric from Washington) before concluding we are totally bullish again.

The chart from 2 weeks ago – for reference.

Stock market technical analysis, market timing

 Position Updates -

Sequenom (SQNM) is up over 50% since hitting its November 9th low (Some of you made enough money to pay for years and years of Gold Membership – I have). This is a full investment allocation. This is a long term investment and I am not in a hurry to sell – however I am always mindful of the technical analysis and a fast run into the $6 area would make me a seller. A constructive pull-back to the $4.00 – $4.25 area would make me a buyer – have to just wait and watch for now.

YPF (YPF) – After liquidating our position for a small loss in October – We reacquired a full position on November 19th under $10.20 (sold in October at $11.80 – saving myself 10%+). The stock is up 10% in under 2 weeks with plenty of room to run.

The political climate of Argentina (YPF’s home base) is not certain by any means and represents the largest risk for investors. The company has REAL WORLD CLASS assets and before the political turmoil YPF was worth 5 times current prices. Any cooperation by the government to settle the Repsol expropriation could propel this stock significantly higher.

The government wants YPF’s gigantic shale play (estimated to be the 3rd largest in the world) developed and is making changes to facilitate investment. All great signs for investors.

From Bloomberg this week…

On Wednesday, YPF Chief Executive Miguel Galuccio hailed news that the government would let it start charging $7.5 per million British thermal units, more than three times what YPF charged for its gas last year.

The new price compares with a benchmark natural gas price of $3.65 in the U.S.
Mr. Galuccio said the news, which was unveiled by Argentine President Cristina Kirchner in speech, would help fund the company’s ambitious five-year exploration and production plan and make YPF more appealing to foreign investors.

“This opens a new perspective for developing gas in Argentina. All the projects we have to launch gas this year now become very attractive for investors,” Mr. Galuccio said.

The new price is much higher than prices granted under Argentina’s older “gas plus” plan that attracted investment from firms such as Apache Corp. (APA) and paid around $4 or $5 per million Btu.

Mr. Galuccio said the higher price will make the company’s investment plans profitable.
After the expropriation, Mr. Galuccio unveiled the five-year investment plan aimed at reverting the country’s declining oil and gas output and putting Argentina back on the track toward energy self-sufficiency. He said YPF would be able to invest $24.7 billion from its own pocket through 2017, with that figure rising to $40.4 billion if the company could ink joint ventures and obtain outside financing.

That plan assumed a gas price of around $6 per million Btu, Mr. Galuccio said Wednesday, meaning the even higher $7.5 price should make it easier for YPF to carry out its investment plan.

During Argentina’s economic crisis of 2001-2002, where the country defaulted on $132 billion in debt, YPF traded in the $10 range and within 30 months was trading above $60.

YPF has had 8 bullish trading days since November 19th and outside of the politicians taking over the entire company – the risk reward with YPF is excellent. We are effectively risking $1.00-$1.50 for the potential of a $40 gain over several years.

Apple (AAPL) naked put options a Gold Member suggestion for November. After causing some stress this play looks good as gold as of today. Premium is ticking off everyday and the position is profitable – up about 33%. Stay put and do nothing. If you were lucky enough to write the puts on my “re-recommendation” on November 8th, you are up big money – over 75% in 3 weeks. Well worth the $20 per month for a Gold Membership.

Zynga (ZNGA) A full allocation – Technically Zynga was showing a bottom in the charts until today’s news. The technical action today – was moderately bullish as the stock held the opening gap down and traded up all day. My position is still in the money however, I will be watching next week to see if we trade below the $2.35 – $2.25 range. Any allocation changes will be posted to the Trading Blog (did you bookmark the Trading Blog page yet? :-)

GasLog (GLOG) A company taking advantage of LNG. Half allocation. Nothing new. Sit tight.

Rosetta Genomics (ROSG) Quarter allocation. Today at 11 am someone bought 200,000 shares in a hurry. Going to be watching ROSG next week. I may add another 25% allocation to the position.

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LNG = Liquefied Natural Gas