This is a trader moment – when you can see everyone run for cover and our opportunity is great. On Wednesday, Chesapeake CEO Robert Lawler single-handedly collapsed the energy market with his comments on his 2nd quarter results, driving Chesapeake shares, and others in the space viciously lower.
Wake up, traders – now’s the time to strike.
I love it when a plan comes together, and my plan on the energy markets has been following almost to the letter the outline I laid out in my book “Shale Boom, Shale Bust.” We knew that the Band-Aid approaches of the independent producers here in the US, of driving down Capex while throttling up production was never going to yield any kind of long-term solution. We were waiting for the inevitable ‘production wall’ to be slammed into at rocket speed, driving the production down – finally – and clearing the markets of the gluts that have plagued pricing for the last year.
We’re not there quite yet – not by a longshot – don’t get me wrong. But the point of trading is to be ahead of the trend, not reacting to it. By the time you’ve reacted to it, you’re late.
One great example of this is in the report and comments of Lawler yesterday on Chesapeake. Yes, I’m singling out a natural gas company here instead of a shale oil company, because I’m now starting to believe that the natural gas glut might actually clear a bit faster…