After getting hammered over the weekend by the media, talk show hosts, and politicians, over high energy prices, President Bush ordered the EPA to once again suspend the federal clean-burning gasoline rules this summer. In addition, the President ordered a temporary halt of shipments to the Strategic Petroleum Reserves until fall. It remains to be seen if 'fall" means before the mid-term elections or after.
In reaction to the announcement, Crude Oil and Unleaded Gasoline prices began to "magically" soften, or at least stop going up. If, and how far energy prices fall from here is anybody's guess. My guess is prices may recede a little more, but with hurricane season is right around the corner, prices will probably firm up a little quicker than most would think.
Whether today's announcement is a little too late is left for the pundits to debate.
Today, several; of our favorite oil stocks in the IA portfolio came under some profit taking. After the recent sell-off, we are still looking at some decent gains.
Valero (VLO): Entry Px $56.61, sold May 62.5 call
Chesapeake (CHK): Entry Px $32.55, Sold May 32.5 call
Conoco (COP): Entry Px $59.73
Marathon (MRO): Entry Px $58.87
Exxon (XOM): Entry Px $59.73
Sunoco (SUN): Entry Px $80.36, Sold May 85 call
The best buys right now are among our (V)alue stocks. If you have been curious as to why we have a (V) or a (A) next to the stocks in the IA portfolio, "A" is for aggressive investors with the potential for immediate results, and (V) is for value stocks which may take a year or so to turnaround.
The best (V)alue stocks right now are:
Anheuser Busch (BUD)- Yielding 2.5%
Coca-Cola (KO)- Yielding 2.98%
Boston Scientific (BSX)- Abbott Labs buying shares.
AT&T (T)- Once again yielding over 5%.
Verizon (VZ)- Yielding 5%
Our two financial (V)alue plays have done well. Those are Bank of America (BAC- cost basis $42.94) and J.P. Morgan (JPM- cost basis $34.50) BAC is up 9.6%, and we have been collecting around a 5% dividend on the stock.
JP Morgan is a big winner, up 22.3%. At our original purchase price the JPM dividend is almost 4%.
In the miscellaneous column, I going to sell the Consumer Staples ETF (XLP) first thing tomorrow morning. I would rather use the money to buy another consumer staples stock rather than the basket.
Despite all of the bad news surrounding GM, I am ok with the GMAC Pfd (GKM). I like the yield, and I like the idea of a potential separation from GM.
On the hedge side, I am going to continue holding the Rydex Tempest 500 fund (RYTPX) as a hedge against a big downturn in the market, and the ProFunds Rising Rates Opportunity Fund (RRPIX) as a hedge against rising long term rates.
I don't know where your brokerage account is held, but my money market account at Fidelity is yielding 4.44% in my IRA, and my tax free Florida money market is yielding 3.24%.
For the day:
DJIA: 11283.25, down 53.07
S&P 500: 1301.74, down 6.37
NASDAQ Composite: 2330.30, down 3.10
