The pessimists are piling on as hurricane Rita approaches land, and it is becoming clear that a snap back rally is in the works. The put/call ratio came in at 1.41 yesterday, only a hair below the 1.42 ratio of April which marked the bottom the correction.
Oil prices are declining because of anticipation that Houston, and 13% of the U.S. refining capacity, will not take the brunt of the storm. Oddly, the most recent Commitment of Traders Report showed that large Commercial Traders increased their short positions just before the decline in oil prices. They were still long Gasoline Futures. Boy these guys are good (See the most recent Investor Alert Newsletter- Fall Quarter, 2005).
The time has come to dollar cost average into some Natural Gas plays. If your looking for idea's, Chesapeake Energy (CHK) has pullback from its high of $37.75 yesterday. I would add to my positions at current prices. Also, XTO Energy (XTO), another natural gas play has pulled back from its recent highs. The stock was recently reiterated a buy at A.G. Edwards, and given an overweight rating at Prudential.
I still believe Wal-Mart (WMT) and Best Buy (BBY) are at attractive entry points for investors. I am going to add both BBY and XTO to the IA portfolio today. My price target on BBY and XTO is $50.
