Snitch's Improbable Oil 100 Prediction Years Ago Becomes Reality

Tuesday, February 19, 2008

11:53 AM

Several years ago Vegas Sports Entertainment broke out a commodity story that will be remembered forever in the speculative world. It was the story that commodities; mainly oil, gas, and gold would breakout to levels that seemed far fetched at the time. Oil was as low as 31 dollars a barrel. Natural gas wasn’t even a commodity people had heard about, and what was so appealing about gold, the boring commodity? Well, VSE came out with definitive speculations backed by conviction, which still today makes them a major holder of some of their speculations years ago. VSE (Vegas Sports Entertainment) said oil would go to over a 100/barral. Gold would go to 1000, and that natural gas would be the most important energy source known to mankind for the next half century.

 

What VSE fund managers did was the boldest move they have ever committed to as a fund. Outside of buying futures; they also shorted the dollar in a different way to play gold. They bought all the commodities, and even some soft commodities such as wheat. But, the VSE story to followers had become all about Chesapeake energy. "We know we cant tell people to play options and currencies. That would not be responsible as they offer more risk the average investor could ever think of. However, we also played the natural gas commodity via natural gas stocks. Mainly, Chesapeake Energy. We brought this story to the public as the stock that every single investor in the world must own. We were not kidding either, and still not kidding. Just literally few weeks ago when the markets were selling off, we literally begged everyone to please buy CHK at 34. That would be almost a whopping ten point gain in less than three weeks of trading. We have bought CHK for years now almost every time in major dips. The key has been to recognize major dips versus profit takers. As it turns out Chesapeake Energy (Symbol: CHK) has become our largest equity holding ever for our fund. This company is an amazing story just like the energy bull market is. We have said it for years that the energy bull market is now an infinite bull market and will last for the rest of mankind. Man simply doesn’t stop using fossil fuels, and we don’t care how much exploration takes place; every decade there will be less and less discoveries of the fuels. That is as logical as one can get. Every decade we have to dig deeper and deeper to get oil, and now more than ever we are getting more and more disappointing results. With India and China, which dominate the worlds populations, and the fact that their economies are just starting to experience opulence; how can anyone not own energy at such low prices years ago. And oil 100 will look very cheap a decade from now. Natural gas below 10 dollars with oil at almost 100 is disproportion. There is nothing man can do to stop the energy bull ever. The only possibility, and we guarantee we will see it here in America; demand destruction for oil. By that we mean that the consumer eventually will no longer care about oil prices. They will get desensitized, and more importantly they will eventually fully adapt by life style changes, and alternative energy choices. Eventually the prices of Hybrids will come down, and eventually most households will have Hybrids. With Hybrids improving even more; will anyone then notice 5 dollar gas when the Hybrid can break it down where the consumer would be paying the same prices as consumers did in the 80's and 90's based on consumption and performance? This is how Europe has dealt with high gas prices. Demand destruction via lifestyle choices of all sorts. However, this will be even more of a catalyst for higher oil prices, and of course the biggest two catalysts: Supply and Demand. Both which the top two fastest economies in the world are increasing demand literally every single month now for six straight years

 

Here we are just several years and today Chesapeake Energy (CHK) is trading at an all time, and up enormously for VSE. KWK the other big energy holding of Vegas Sports Entertainment has already more than DOUBLED based on its 2:1 split. It is important to know that VSE has a much bigger holding in Chesapeake Energy. "With KWK we take profits after each 10% run up. We sell about 2-3% of our holdings. With CHK, we haven't sold a share. If anything as everyone knows; we keep buying more ONLY on major dips. Our last buy was a huge buy at 34 just several trading days ago. KWK will always move much faster to the upside, because of its market cap, but it also exposes more risk. However, KWK is as solid as a rock. The natural gas story hasn’t even begun. People will start flocking to these stocks when natural gas finds a steady price above 12 dollars a share within 3 years or less. CHK with a steady 10 dollar natural gas price at minimum will be in the 70's. We are proud to be one of the few to be in energy at basement levels. We were at the lows literally, and some day people will call these levels the lows. We will always be known for calling oil 100 when it was at 30, but the next generation will get credit for calling oil 200 at 100. Anyone who thinks oil will retreat; oh they have something else coming. Just several weeks ago oil was selling off every day. We guaranteed oil would hit a 100 before 85 and this was when oil was at 88!!! Oil is not being driven up by pure speculation. There is a SERIOUS energy crisis. Lets put it this way: Imagine the current housing market. You know how bad it is. Multiply that by 100, and that’s the energy crisis. I am sure you are laughing. Thinking how exaggerated that statement is. Well, people laughed at us as recently as a few weeks ago when oil was selling off with natural gas and we said everyone must own CHK at 34. Unfortunately, people wont be laughing when gas will be at an average of 6 dollars a gallon within 5 years. This is a crisis that needs even more attention than a bunch of corn hoaxes such as ethanol. The ONLY energy answer to oil is natural gas. Trust us. It WILL happen," Vegas Sports Entertainment.

 

And what do they mean when they say "It Will Happen." 65% of every automobile will be running on natural gas within 7 years, and who will be the biggest natural gas producer in America? Of course Chesapeake. But, guess what? Chesapeake wont be around seven years from now! They will be taken over by a much larger company that NEEDS to delve into the natural gas market aggressively. Oh. And if Chesapeake Energy is still around seven years from now as their own company? Well, then you can most likely buy the shares at triple digit prices," VSE.

 

No one has called the energy bull market as early and as accurate as VegasSnitch.com's fund managers. Their conviction is confirmed with their massive holdings of CHK (Chesapeake). VSE got in at very low prices years ago, but years from now today's prices will look dirt cheap. 

Snitch: Commodities Still Early

Tuesday, March 11, 2008

7:23 AM

Several years back when oil was in the 30's and no one was talking gold. Natural gas? People where asking what the heck is that. They are all commodities. It was back then when the Snitch came out with guaranteed calls that oil would go to a 100 within 3-5 years and gold would see 1000 within two years. Well, it has taken gold more than two years, but the point is while people thought the Snitch was out of logic; the Snitch told followers of VegasSnitch.com to invest as much as they could into commodities. The two natural gas names were Chesapeake Energy and QuickSilver. Symbols CHK and KWK. Make a long story short: KWK has more than doubled and CHK as much as 76%. Of course many laughed citing such things  as global warming and natural gas would have no use, and there would be alternatives  for oil.  As for gold, we can name a million reasons why people would not want to invest in gold while we were giving them a million reasons it would be impossible for gold to stay at such levels we had become accustomed to. The big Vegas Sports Entertainment investments are in natural gas, and Vegas Sports Entertainment is reiterating their stance on commodities. That stance is, we are in the infancy of the commodities boom. Sounds crazy, right? Maybe it is. The Snitch says, why should commodity prices slow down long term?

 

With the growth of China and India, precious metals and energy will continue to soar. The population of the world is only expanding, and the demand for commodities will only grow more every year for the rest of the Earth's life. Like we said years ago, it is common sense. Commodities are not computers and houses where we control our own destiny. We can control how many houses we build. How many computer chips we build. Now think, can we control how much natural gas we can produce? Absolutely not. Mother nature controls our destiny for the commodities we will have available for the rest of mankind. Of course these are commodities we find underground such as gas and oil. Not soft commodities like wheat. We can produce as much wheat and soybeans as we want. We are actually producing more wheat and soybeans than ever. The Snitch has loved soft commodities, but Vegas Sports Entertainment is pushing natural resources not soft commodities, although they have room to expand as well. The most important natural resource for the next few decades will be natural gas. Natural gas is the cleanest fuel, and still extremely cheap. Automobiles will eventually be mandated to run on natural gas. For the past few years many speculators were nervous investing in natural gas, because of the imports of LNG, which is liquid natural gas. LNG being imported could interfere with our own demand in the country. Last year there was a healthy amount of LNG coming into the United States and many were to frightful to invest in such companies such as Chesapeake Energy and QuickSilver. What they failed to realize was the fact that LNG imports would eventually slowdown. This slowdown as the Snitch wrote last year would be due to the falling US dollar. Vegas Sports fund managers continue to say that the dollar will fall. "When we said several years ago the US Dollar might become a museum piece someday we were not being totally sarcastic. It is still a very important currency, but we think it will remain weak. There is no reason for the trend to change, and with the fallen dollar there will be a significant drop of LNG as an import coming into the country. This means Chesapeake Energy would benefit great from the falling dollar as their own natural gas demand would spike here in the states. Even with LNG coming in, there is nothing that can slow down the demand for natural gas long term. What people fail to realize is that early preliminaries are showing natural gas companies ramping big time production. Chesapeake is ramping as much as 20%, but even they know they will never be able to drill enough in the next decade to keep up with demand. What will happen when every automobile will be running on natural gas? This is a no brainer. We don’t know what else to say. We have been saying this for years. You CANNOT reproduce commodities found below the ground. Its that simple. Simple economics you learn as a kid is supply/demand. So, if you know there is a FINITE supply of these natural resources underground, consumption demand only rising;  is it not common sense that demand will always be well ahead of supply in this market? It is IMPOSSIBLE for supply to always meet demand in this market with the two world biggest populations (Indian & China) growing at 10% or more," VSE.

 

What about recent data that shows builds in oil? "That is the biggest joke gauge of all. It is effective for short term volatility, but it is absolutely absurd for anyone to think we ever have an over supply of oil or gas. For that matter, anything you find underground. These inventory numbers are effective to trade futures, and we do a lot of trading. We do use these numbers for hedges on possible short term price movements. For long term, these inventories have no intrinsic value. Its simply another tool amateurs trade on and get burned. Wall street really isn't difficult like most like to make it appear. It is much more common sense than people think. If your supply is FINITE, how can it ever meet demand? Many scientists believe we only have about another four centuries worth of fossil fuels before we run out. That is scary, because it is FINITE," VSE.

 

VSE reiterated their CHK holdings again, and that at these current natural gas prices CHK should double in price again within 2-3 yrs maximum. It doubled in the last 3yr run, and they are calling another double pattern for the same time frame. They do also emphasize never to chase stocks as you will get burned. "CHK will go much higher with today's natural gas prices. However, the overall stock markets are so brutal that even CHK will have drag down days for no reason at. This will only be a short term effect on CHK and other natural gas stocks. These stocks WILL catch up to the commodity price. This is why commodity traders always favor trading the actual commodity versus the commodity stocks. We do both, and have been long natural gas since six dollars. We are aware of Boone Pickens being short natural gas around 7 dollars. He will continue to feel the pain. He might be right with oil possibly taking a breather, but he wont see 7 dollar natural gas in the next three months like he would like. He got greedy, and even the great Pickens misses. The easiest commodity trade the last three years has been to sell natural gas into any strength, and we are sure Pickens made a ton with this strategy. Every time natural gas hit 7 dollars it retreated back to six and even lower. However, this time it did not. Mr. Pickens needs to believe in his own beliefs again, and that is FINITE resources are just that: FINITE.

As the Snitch has said for a very long time; Chesapeake energy has more, much more in its bag than anyone really knows. That secret is officially out now as the company has announced their secret weapon to take over the industry. That secret: Haynesville!

 

Chesapeake energy has now established itself as the major player in this rich natural gas area that can literally close to double Chesapeake's current natural gas assets it has today! That is the find of the century according to us in the natural gas industry. This Louisiana area will provide Chesapeake natural gas production never seen before anywhere in the entire country by one producer alone. This new discovery is a jolt to Chesapeake's future, and a huge hit to its competitors. Sure. One cannot see the detriments to the competitors today, but this is a major blow to Chesapeake's competitors as Chesapeake has made the biggest discovery for the natural gas race in the country right below everyone's nose.

 

"With today's announcements, we were not super surprised as this is why we have invested in CHK for a very long term. We knew Chesapeake would not slow down production and growth in a time where natural gas is just beginning its bullish run. Chesapeake has given investors a lot of tips that it had some major discoveries on its way, and now those discoveries are a realty. We cant even begin to tell you how big this Haynesville is. If they are just half right about Haynesville, that would be significant enough to CHK's assets that would equate to stock value that investors never dreamed of when investing with CHK. Without these discoveries, CHK is easily worth well above 90 dollars, so you can imagine the rest of the story. The Chesapeake story just got 3 times bigger, and now we urge investors to hold onto CHK 3 years longer than their original plans. Within those three years, CHK has a chance to triple its shareholder value! YES. TRIPLE! That is how significant this story has become, and Chesapeake is now the undisputed king of natural gas," VSE.

Chesapeake's Newest Offer Brings Opportunity @53 Levels

Thursday, May 22, 2008

11:29 AM

We have been yelling the Chesapeake story for years and years, and have bought shares at very low prices, and have added every single time on major dips. Today, has been an enormous dip that is following this weeks CHK sell off. VSE has been adding once again on these major dips, but has now added a SIGNIFICANT position at 53 dollars exact. That is a major sell off considering CHK was near 60 just a few days ago. Why the sell off? Chesapeake increased their newest offering by 60% of their original statement of 500 million. That was very disappointing to the street, but understanding by the smart money. "Unfortunately, the natural gas market is so close to being the greatest thing in energy for this century, that CHK has to be aggressive. CHK can potentially become the biggest and hottest thing in the world of energy with its Haynesville findings. They are also going to have over a billion barrels of oil. It seems CHK is caught between a rock and a hard place. If they remain passive, they cant bring Haynesville to fruition, but when they raise more debt; well its obvious what will happen. Many will flee the stock and company maybe forever. Some investors simply do not want to be part of a story that is also about debt. Sure. We know the growth and production story, which is amazing, but great investors never ignore debt. This recent selloff is a major selloff, because many investors would rather miss the growth story than to be in a growth story with massive debt. That is prudent investing. Many times investors never get involved in great stories, because of debt. Yes. They may miss great opportunities, but they also know they can stay away from disasters. We (Vegas Sports Entertainment) obviously, would rather be part of the growth story, because the growth will be so robust that it will make this company's current debt look like peanuts in years down the road when CHK's cash flow will become to levels no one ever imagined.  We cant say nothing has changed, and everything is super rosy. Of course, a lot has changed. CHK continues to break promises of becoming financially responsible. We say it they way we see it and hear it. We are VERY close to this story, and we always show the negatives as well. Management in CHK is superb, but at the same time irresponsible to its shareholders. Its an oxymoron. We have no doubt CHK is the best managed energy company, but at the same time they do things that hurt its investors knowingly, and that is bothersome.  They know these offerings will hurt investors although short term, and we are all about long term. However, not everyone can be long term like funds and rich CEO's. Some investors do not have all the time in the world, so it is time management doesn’t just think about their own holdings, but all investors. They need to explain thoroughly in conference calls when they do these offerings, and explain as to why they are taking these steps and actions, so the retail investor gets an understanding. We (VSE Fund) know why, and for us it only gives us more opportunities to buy at phenomenal prices.  For the retail investor; we are disappointed they get ignored by management. When you are not honest about your financial plans, of course the stock will get crushed. What management needs to understand is that they are not the only natural gas company, and that the street could easily turn their back on them and still invest in natural gas, but with other companies. So, management better understand this right away. They can no longer just take on debt and offerings and say to themselves, "we will be okay long term." Eventually, that ok long term may not come as your investors have left.  This is why CHK has been selling off. Not because natural gas is. This is why there is a panic as to why CHK is selling off more now than ever before during the last several years. For some it makes no sense. How can CHK keep losing ground when NG keeps going up? It is because of what we have stated above. The street does not like debt and dilution topped with uncertainty. That uncertainty is, how much more debt and offerings? When will it ever end? And when will management come clean with their financial planning? Fortunately, for Snitch followers we can in full confidence illustrate to them what is going on. CHK has a lottery ticket in their hands. That is an understatement. The lottery ticket is Haynesville. When Haynesville comes to fruition, the entire country will know who Chesapeake Energy is, and their production of natural gas will be at levels never thought of by anyone in this industry. They will EASILY surpass their competition. Their production of natural gas will cross eye the analysts when they see Chesapeake's income statements. You have a unique situation here. Natural gas like we have been saying is in its infancy stage where people are starting to understand the significance of natural gas, and we will say it again: NATURAL GAS IS THE ONLY ANSWER TO OIL, EVERYTHING ELSE RIGHT NOW IS A COMPLETE JOKE. NATURAL GAS WILL BE AS IMPORTANT AND MORE LIKELY MORE IMPORTANT THAN OIL IN THE UNITED STATES. THAT IS A FACT THAT CANNOT BE DENIED! Knowing this Chesapeake will be a triple digit stock WITHOUT Haynesville. Now with Haynesville, and once Haynesville comes to fruition; imagine where CHK is going! To us, the debt and offerings are a MUST action by the Chesapeake, but its time management is more accurate and honest with their planning. Aubrey is stuck in a tough spot, but we understand fully. Chesapeake will be at a 100 dollars MUCH SOONER than anyone thinks, and that is BECAUSE of these debts and offerings as oxymoron has it sounds. These debt and offerings are all about Haynesville, and Haynesville means CHK is three times bigger than how you view CHK today!

 

Disclosure: VSE has bought CHK this week starting at 56.60. The latest buy was VSE's fourth largest buy ever at 52.97. We continue to defend the short to mid term investors that Aubrey and Chesapeake must be more lucid with their financial planning, and management is definitely in the wrong here as it is dishonest as well, but we also defend CHK's decisions for the long term holder that will bring exceptional value for the company.

Chesapeake Energy update:

 

What was a phenomenal year for our fund has watched our core holding (CHK) shed and shed and shed profits every day at 5-10% rates daily! To the point that if this happens for a few more weeks the stock goes to ZERO! This stock is selling as if there is no such thing as Chesapeake Energy and no such thing as natural gas. So, what is exactly going on? OK. Its obvious we have a serious rotation out of energy/agriculture/ and commodities, but no commodities are taking the punishments that natural gas stocks and CHK are. Not even close. Take a look at one of our other holdings, POT (Potash). It has been getting murdered, and what's the percentage decline? Only 16.5% from the highs. Wouldn’t CHK holders love only a 16% sell off? What is CHK's? 37%. That is THIRTY SEVEN PERCENT in the same month it hit its highs! By far the worst stock action we have witnessed ever for a stock improving its fundamentals. Folks, were not talking over a period of a month or two or a quarter. We are talking in less than THREE weeks this company stock has shed off 37% in a total FREE fall. What does this mean, and where does CHK and natural gas go from here.

 

OK. The proofs in the pudding. Whether you like it or not, CHK was a bubble and ran up on speculation and hype rather than its fundamentals. That is very hard for us to admit, but we always tell it like it is. Why do we say this? Look a strong story doesn't go down 40% this easily even in commodities. Why has natural gas taken the biggest hit? It had the most hype thanks to hype artists from TV such as CNBC, etc. There is not ONE person you can name that hasn’t heard of CHK. And anytime EVERYONE crowds a trade, look out below. They absolutely killed this stock. You can be in denial all you want, this stock has broken every technical in sight. That is a 100% sign of a bubble bursting ESPECIALLY if the company's fundamentals are growing. The problem now is, because this was a bubble no one has any clue where the bottom is. What's tougher is that the recovery will take MUCH longer than the beat down. There will be people that will NEVER EVER touch a commodity stock ever again especially CHK. Why would the conservative retail investor ever touch a stock that goes down 40% in seconds for being fundamentally strong? Welcome to the world of commodities, and even worse bubble. CHK was a bubble. Natural gas was a bubble. It burst. However, this bubble is not like other bubbles. The underlying catalyst to CHK's and natural gas's initial moves are/were FUNDAMENTALS driven by demand. These fundamentals have not broken. Not even close. Lets talk about this further. From a stock perspective, CHK was an inflated bubble that unfortunately we got blind sided by and initially we thought it was a commodity correction, which are usually painful and vicious, but this has far extended that definition. However, lets go to the company and the commodity.

 

NOTHING has changed fundamentally long term for natural gas. The long term trend is STILL very bullish for both of these, and MINIMUM this commodity bull market goes another 5 years MINIMUM. Oh you cannot picture. You will think we are crazy. We guarantee you that oil will be VERY close or above 200 by the years end of 2009. No one can even picture this or see it. Oil is getting crushed based on supplies coming to the markets. This supply we believe is a result of China cutting down oil consumption during the Olympics. However, once the Olympics are over and China ha ramped up its economy even more; they will make up the supply consumption two fold. China and India DO NOT care Americans want lower oil prices. China wants to be the SUPER POWER of the world, and what we think they will go through demand destruction like Americans are? Couple things the market will eventually digest, and why CHK will recover, but LONG TERM and NO ONE knows where the bottom is. OK. Now we have lower energy prices here in the states, and energy stocks are getting killed. Well, with lower energy prices, won't demand pick up again to use more oil and gas again? Eventually, this event will be digested in the markets. Whether you believe it or not, Chesapeake can make as much money with NG at 8 than it at 10, because at 8 there will be much more demand. However, CHK and NG companies MUST make this known to the public, and that is, "We make a ton of money with NG at 10, and we make a ton of money at 8." Chesapeake gets its gas for small change and sells it at higher change, and does this over and over and over again. It is a cash cow. It is an incredible business. These companies, especially CHK are making boat loads of money with high cash margins. The overall commodity trend long term is ridiculously bullish. And no the US dollar isn't making a come back. So, CHK and NG and ALL commodities from a MACRO perspective are intact and will be going up MUCH higher longer term. The commodities such as oil and gold have corrected, and the corrections are VERY healthy. Think about it oil is STILL in the 120's and gold still in the 900's!!!!!!!! Isn't it amazing after a huge sell off this is where gold and oil still are? Guess what? The commodities are not selling off anywhere near as much as the stocks. And this is VERY troubling. VERY! The purpose of staying away from the commodity and buying the stock is the exact reason that the commodity futures are SUPPOSED to be 10 times more risky than buying the stocks. Instead it’s the stocks such as CHK moving in 7-10% increments in a HURRY to the downside. This has been painful and very disappointing. We hope people use sell stops and covered calls or even strike puts. Its more advanced, but as we have always said you must know how to lock in profits based on your risk tolerance, and protecting yourself. Now we will admit, we can't blame many for not being prepared for this downside move. As we always expect corrections in commodities, and we got that in the actual commodities, but a serious sell off in the stocks. CHK is broken. It’s a broken stock, but the company is not. This market has now gotten out of control way beyond rationale. Global fundamentals do not change in two weeks, but this is what the market is saying right now, and it is down right scary.

 

Look you simply cannot change the economy artificially and that’s what's happening right now. Congress is attacking the shorting of financials. How does that improve Washington Mutual's chances of EVER making money? How has that created more jobs and growth in the economy? The government taxing its citizens to save Fannie and Freddie will be good long term? That’s laughable. That in itself can be the death to the dollar and send gold well over 1200 by years end. You simply cannot force the economy to change as if nothing happened? This economy is NO WHERE near recovered, and oil will come back and BLIND side this economy VICIOUSLY. Global markets don’t work like that. You just cant get lower oil prices because you want them WITHOUT any action. However, that’s exactly what has happened short term. Americans wanted lower energy prices, and they have gotten them via congress trying to flush out energy speculators and other bogus ideas. Sure. This might be working now, but it will be VERY short lived. Oil doesn’t go down because that’s what we all want. If the markets were that easy; we'd never ever have a recession or a crisis. And because energy is falling, all of a sudden banks are going to make money from their housing bets? Do you see where we are going with this? DO NOT FALL FOR THIS RIDICULOUS MARKET TRAP IN ANY SHAPE OR FORM! Of course the U/S economy will eventually recover and boom. Never bet against this country. But, this is a problem this country has NEVER faced before INCLUDING the depression. You have inflation that WILL NOT go away. You WILL HAVE MUCH HIGHER RECORD ENERGY PRICES, no job growth, and a financial crisis beyond measures. All of this hasn’t ended, because we are 20 points lower in oil. How funny is that? However, the energy stocks are acting as if energy is no longer needed. So, the global and macro story here is ONLY beginning. We have followed commodities our entire lives. A commodity bull market is NEVER short lived. They go on for decades sometimes. Here lies the problem, if you truly think about it natural gas really never participated in this commodities bull market. It has been the biggest commodity disappointment we have ever witnessed. We all have made large investments on NG and CHK, because of the belief in NG, but it has been horrific. It took it years and years to break out of 6-8 range, and it took days to get back to the 9 range. D-A-Y-S! It has NEVER challenged oil once to decouple and make a run for a fair ratio of 7:1 or even 6:1. When will this happen? Well, just like how congress has went after oil, we now need them to back NG, and this is what the NG industry has been counting on. A push by congress for more natural gas usages to lessen foreign oil dependency. We love Al Gore, but he wants all or zero. Meaning he wants all fossil fuel dependency done. That is a ridiculous dream if you ask us, but what Mr. Goes needs to understand is why not GRADUALLY move away from oil dependence with cleaner fossil fuels, and that is NATURAL GAS. Al Gore has acknowledged natural gas this past weekend on Meet the Press, which was a nice head start, but only if he can push natural gas instead of ALL ZERO goals of getting off fossil fuels. Gore said Natural gas is a nice option, and he needs to be pushed that we can start using this option NOW, and in the mean time work on his long term plans with Boone Pickens. The more time we (NG investors) lose getting NG usage recognized, the more broken NG can become, and if NG doesn’t get this recognition, it will only give competitors like solar and wind time to drive NG demand down. Now we doubt that happens since NG is already here, but we are now questioning why in this biggest energy crisis in the history of this world no one is really making a significant push for NG when it is already here? This is the reason we think NG is selling off much faster than oil. We believe NG has been hyped, especially by the likes of Jim Cramer as "the year of natural gas." His reasons are like many experts, it is impossible to keep ignoring NG. And it takes one congress bill to drive up NG demand forever. Or any presidential candidate making NG a priority in their energy policy. This is where we are stunned, and it is KILLING natural gas, and that is the lack of knowledge by both candidates on energy issues. To the point they hardly even talk about it. With the recent polls favoring O'Bama to win; could you imagine if O'bama puts NG on the forefront? He would easily do this is Al Gore pushes NG. Al Gore is a SIGNIFICANT energy figure, and the MOST important figure in the world when it comes to energy policies, and this is why NG is getting hurt. Gore is an advisor to Obama already, and Gore keeps pushing things that don’t even exist or applicable for years to come. If Al Gore can get the NG message, NG would run to 20+ in a hurry. The reason we are playing this scenario is because we are inches away from this really happening. We believe all NG insiders including Aubrey Mclendon has been banking on this to the point where he is getting very active in spreading the message of natural gas. We believe Aubrey and NG insiders saw this curve ball, which is a lack of action by congress and the presidential candidates, and Al Gore to ignore natural gas the entire time during oil was going up. This is now becoming a concern for us as well. The ignoring of natural gas while oil has been running up, and now we see the panic. The panic is, oh no oil is coming down, and during the oil run up natural gas never got recognized or really had its day. Come on. NG had one great month like CHK. CHK's run to 74 basically happened in June. It went straight up that month and now going straight down literally this month. This is why NG is selling off more than oil. Keep in mind oil in America is a global story no matter what, but NG is ONLY a domestic issue in America, and that hurts big time. Why? Because, if our domestic economy isn't doing well, you will get more demand destruction from NG than oil. Did you see the EIA numbers today? Oil supply had a drawdown AGAIN! However, gasoline distillates were up big again. NG is a domestic product for us, and CHK sells its energy only to Americans, and if America has a weak economy, isn't it sensible that NG demand will struggle? Absolutely! And that’s the problem. NG supplies are down only because of very few LNG imports. LNG goes for as much as 20 dollars around the world, but half that in the US and CHK's customers are in the US. So, what has to happen?

 

NG must get recognized by congress or important figure to make a transition to NG in a big way. This is the major way to keep demand up. More mandated NG uses. If this doesn’t happen in the near distant future, not good. And just as important, CHK and the US NG industry MUST be able to export their product. If they can accomplish this, then their product instantly is worth twice as much, but MORE important: CHK and American NG companies will be the BIGGEST suppliers around the world! Why? Very simple. The US dollar is very weak, and other countries can come in and buy the American NG with their stronger currency. Lets be honest. The American companies doing well in this economy for the most part have exposure to the global markets. Exposure to exporting. Exporting in the US is great as there's huge demand by other countries to buy from the US for very cheap. Now imagine if CHK and its peers are able to become exporters, BECAUSE AMERICA IS BECOMING A BIG NATURAL GAS COUNTRY!

 

Two Biggest Pieces of News now for CHK

 

1. NG Recognition a MUST by congress
2. CHK and its peers opening ideas of becoming exporters with massive production

 

If one of the two happens, NG will go to 20 dollars near term!

 

 

For now, we are in the domestic story of natural gas. The demand is slowing down while production is improving. That’s a terrible recipe. However, despite all the doom and gloom NG is still near 10 dollars. That’s a great price for CHK to make great money. Also, the industry sooner or later will recognize how ahead of the game Aubrey is compared to everyone else in this industry. For months including Jim Cramer, traders of CHK were exasperated that CHK hedges so much of its NG that CHK was not running up as big as others while NG was going up. However, every time NG would go up, Aubrey Mclendon was hedging. This is a sign that even during the best NG run we have seen in years, he KNEW NG was coming back down. While other companies remained greedy like XTO's Bob Simpson. Speaking of Mr. Simpson, talk about hyping: he basically guaranteed NG was going to 16. Mclendon stuck to his game plan. Didn’t get caught up in the hype of NG going up, and continued to hedge to the chagrin of investors who wanted to be part of the NG run up even more. And of course, Aubrey looks like the true expert once again. He was DEAD ON with his hedging, but he also was DEAD WRONG. He commented strongly that he hedged to protect shareholders risks and volatility to the commodity markets. In theory it made sense, but in reality, CHK shareholders have been through more risk and volatility in three weeks than a commodity trader will experience in a life time. So, here we are sitting at 47, and no one knows where the bottom is. Energy prices are in a free fall, although we do not think oil is in a free fall, which makes this NG sell off more disappointing. As for CHK. Oh wow is all we can say. We will be honest, we had anticipated a correction as there are always corrections in commodities, but we did not see this blind side. We outlined the importance of the July 55 puts when CHK was in the 70's and thought it was very important to take a look at that as NO ONE buys that type of position unless they have a strong bias. Turns out that was the greatest trade of the year in energy to buy 55 puts knowing you only have 2 weeks to get there. WOW! So, now here we are at 47. FORTY SEVEN. The bubble has burst. Aubrey hasn’t come out. He needs to come out before even earnings to protect his shareholders. The NG industry needs to comment on what they think is going on. That may seem a stretch, but its not. Many companies come out to the defense of their companies during such times. Understand this: In the past year investors of the market outside energy have felt pain and pain and pain especially in the financials. While these poor investors saw stocks like CHK more than double as energy investors were celebrating making money in a bear market. And in just THREE weeks, CHK shareholders have felt more pain than a years worth of being an investor in this market. That is an understatement. This stock has went down in THREE weeks harder than many dot com bubbles that burst. Can you imagine the investor who got in on a pull back few weeks ago knowing he/she had a great fundamental company? They are basically done for the year in just three weeks by investing in a company that generates cash in this economy!

 

Never point fingers, but it is troubling to us that no one ever talked about the possible negativities of being in CHK. We outlined in many articles how the risk kept growing with the overspending and offerings and changing stories, and of course the risk of being in the commodity sector. However, hypsters continued to yell CHK CHK CHK CHK. Jim Cramer STILL keeps yelling it’s a bargain. If natural gas story doesn’t pan out, this could be the turning point of Mad Money. Trust us we KNOW for a fact that MANY thousands of people jumped into NG stocks and the so called Wildcatters' near the tops and even in steel companies, while Cramer was warning that to stay away from Citigroup © just few weeks ago, because it would go to single digits. The hype got way carried away. We got into CHK years ago when no one knew who CHK was or what they did as we did with a lot of commodities. Our KWK is STILL a double for the year almost while CHK is becoming a very average performer compared to many that ran. How can our KWK outperform CHK when KWK is a way more speculative play? Here lies the problem: Now the entire world knows about CHK just like the MSFT's, etc. Once your stock is world known too many people are in it. What's this mean? There will always be more potential for sellers than buyers, since the buyers are already in. This makes a stock much more difficult to go up. And the bad news, MANY amateurs are in such popular stocks. They are in the stock for the sake of being in it cause they don’t want to be left out. From a stock technical perspective this is where the problem is now. You can bet your life most of these quick money traders saw the stock go all the way up, bought no protection, and riding it all the way down. So, now we have players in a stock that ran up on greed and now facing fear on the way down. Greed/fear are the elements of the markets. Again, we are beyond oversold, but we thought that after a 15% pull back as well. Now 40% and counting. People are wondering how can you lose an entire years prosperity and fundamental growth in just a few days? And these traders now are banking on hope unfortunately. Everyone thought 50 would be support, and we blow by that to 47. These stocks are selling off by pricing in NG even below 8. The street is expecting a constant NG sell off, and this would price CHK much lower in just weeks! All this means that CHK has done ZERO for investors in almost 4 years. In 2005 CHK was at 40 briefly. Today at 47!!! The worst part about this is during 2005 to 2008 was the GREATEST energy run in history and CHK sits at 47? This is a reflection of an over aggressive attitude in the ENTIRE industry. Aubrey is the best CEO in the industry, but his arrogance has caught up. His arrogance will prevent a buy out if he keeps yelling our NAV has us at 150. Aubrey, did you ever wonder if your NAV is wrong? During the beginning of this sell off Aubrey blind sided Wall Street with a HUGE offering. Of course, this sell off has priced in more than an offering. Its pricing as if CHK wont be in business in a few years. This sell off has become ridiculous and irrational for sure, but now the street wants to see CHK move on its own without higher NG prices and hype around the industry. Notice the ultimate trigger for CHK's peak was the announcement of the Haynesville joint venture. The stock slid ever since that announcement, and has been in a free fall ever since. Many thought that would trigger the next leg up, but that was the peak as it is proved now, and it burst the bubble. At that point the street was a little tired of the hype and the arrogance thinking you can continue to issue shares, increase debt and not think eventually the street will punish the entire industry. Keep in mind again, these NG stocks are losing much more than the commodity itself. So, there has to be a little more to this sell off than just NG going down. Look at the integrated oils. They are still performing solid. Take a look at

SCHLUMBERGER, symbol SLB. This will make us NG holders throw up. That’s what a stock is supposed to do during an energy bull market. HOLD GAINS! So, why NG loses more and more? The industry has been talking a little to much and not enough to back it up in our opinion. So, it now comes down to going up on TRUE fundamentals instead of a hyped bubble. Now how much hype is left in this stock before we find a bottom? We truly believe all the hype is close to being out of the stock, and should head back up sooner than later. Along the way of the recovery we need significant news of actions to reduce debt, and CONSTANT reminders by CHK management of this progress and reminders of no more offerings. We will be the first to tell you and we believe Aubrey knows this as well: One more offering and this story will over for minimum 5 years including the developments of Haynesville. The street knows CHK has all it needs as a NG company, and has plenty of growth. If the street sees more spending and greed to race to be the biggest, we promise you ANYTIME in the history of the stock market where competitors ignored debt and their primary goals were just bigger and bigger; 80% of the time its an ugly ending. The time has come that we know you have the gas, get it out, and use the proceeds to pay off debt. The most ridiculous comments out there are that debt doesn’t matter right now, because the first payments aren't due until 2013. That is a total lie. All the street wants is financial responsibility for growth companies. CHK has been so enamored being the biggest NG producer that it is killing their shareholders. And they keep saying the rewards will come, etc. This is at 47 dollars from 2005's price of 40! And the only reason it hit 40 was because of Katrina! Another move by hype and bubble that of course burst. When will the street move this stock because of fundamentals? As soon as CHK shows debt reduction and responsibility. As much as it hurts Aubrey, he needs to start selling as much as he can to other companies INCLUDING competitors. At the end of the day, a public company's goal is shareholder value, not being the biggest. Being the biggest means nothing if your stock is terrible. Again, this stock has lost 27 points in seconds. That’s an over kill, but the street has managed to do it, because now the negatives of these NG companies are being talked about for the first time in public instead of hype. And if Aubrey wants a buyout his asking price is only getting lower and lower, so he needs to understand he needs to take measures right away to preserve shareholder value. Again, what kind of run was this that it took seconds to lose it all because NG loses 3 dollars and oil 20? Even worse, CHK has become more than an energy stock. It is now being played by those shorting the market or going long the market. If you think markets going up, short CHK. If you think markets going down, go long CHK. CHK has decoupled itself totally from the overall markets upside. The market has gained 800 points and CHK has lost 36% since! Now we were thinking if CHK could be in the 60's during the market sell off, imagine where CHK would go once the market recovers. It did the exact opposite. Since when was there a rule that CHK and financials cannot go up together? Longs need to understand this was a pure bubble and hype play. They also need to understand this is a real growing phenomenal company. The good news is that CHK has still had a solid year compared to the markets, but the bad news is that it took a great year into a disappointing year in just days. Now we find it hard to believe the market can get away with this. A snap back should be expected and a "real" CHK price should come into play We are hoping this consolidates back to the mid 50's and from there let the company develop its stories, especially cutting down debt. If Aubrey is so conservative with his hedging, he needs to apply that to the company financials now. Aubrey can turn this around in a hot second if he changes the ENTIRE approach to growing CHK. Now doubt he has built a monster, but with monster debt. However, that is debt CHK will easily handle. CHK needs to show the street that, "we are done with our acquisitions and over spending. We are happy with all our plays, and from here all our concentrations will be on these plays. If others find other fields, great for them. CHK will now be a super conservative growth stock. We have all the assets we need to raise capital."

 

If you got into CHK based on hype, please do as much home work as possible. If you are buying blindly saying to yourself no way this can go lower, etc., to good of a company, you are buying on hope. You know our stance. We stick to our conviction that this is now the cheapest American company on Wall Street. But, apparently it doesn’t matter what we think right now. The Wall Street herd controls this market casino, and they are using stocks as trading tools. They can make stocks that will NEVER survive in this environment double and triple in a few weeks, and shorting stocks like CHK that are cash cows. This move started by congress as shorts now know to make money you should be careful shorting financials, so lets find another sector to beat up. Isn't it amazing you can speculate all you want, not short financials, but you cant speculate oil, but yet you can short the hell out of it? This is our biggest mistake we have made admitting. Owning energy in this environment is now a bet versus the government. The government wants to artificially bring energy down to the ground. This makes this environment even riskier. They are trying to end the commodity run by artificial manipulation. Last we checked, we thought we were a free market. Look at us now. Energy companies get punished for investing in the right things, and bank stocks are being helped out because of their greed, excessive greed for betting on the wrong things. So, this market is in a free fall, and NO ONE knows where its going. This has been much more violent on the downside than anything we have seen in a decade. That is no exaggeration. CHK has went down BIG 8 of last 9 trading days. CHK never had a +7% day during its run all year, but has now cleared -7% three times in ten days. The story of the summer for NG will be the sector bull run missed by inches. By that we mean Dolly missing literally by miles for energy disruption would have prevented this weeks sell off, and CHK keep in mind Monday was near 56, and a disruption would have taken us back to the 60's. So, what have we learned:

 

 

Still be careful as CHK is super hyped

 

Always use stop losses and options to insure downside protection

 

Never fall for euphoria. When stocks are going up, think NEGATIVE of what can go wrong. Not positive.

 

Never ever come into a crowded trade to late as the crowd can turn on a dime

 

Its obvious for CHK to get to our goals we need NG at 14-15 minimum. A company's NAV is the COMPANY'S NAV

 

Owning CHK is owning the NG commodity with more risk right now. It is what it is.

 

If you haven't sold out, DO NOT PANIC! CHK fundamentals and NG are STILL in place. CHK will be much much much higher, but it will take longer than we ever thought.

 

If you rode it this far down, obviously there was no discipline. So, make up your discipline with patience. By that we mean have the discipline to hold onto this stock for years if you believe in it. For now the story (but, not fundamentals) is over even if the stock snaps back quickly. The stock snapping back will be based on short covering and oversold conditions. Do not turn this into a game of hope. Stay on top of things, especially the negatives. The final offering should have been a clue even to us that its time to start locking in heavy profits for now, because how long will you keep diluting investors?

 

So, concentrate on the negatives. Ask about negatives. You know the positives. Don’t be a long with your head buried not wanting to hear the negatives. If someone is talking about the negatives, DO NOT tune them out. Listen to what they have to say EVEN if they are a short. They are a short, because they KNOW about the negatives. Listen to them more than the pumper longs! Ask why they are short instead calling them a basher and names. Remember, shorts are ALWAYS better investors than longs. ALWAYS! This is proven. Shorts make MUCH more money in a downtrend than longs do in an uptrend. Look at this situation. Even if you were late to shorting CHK say at 60, you are still up 13 points! Shorts do not get burned as often as you may think. They get burned by squeezes only AFTER they are already in the money.

 

If you are a true believer of natural gas, start petitioning to your local congressman. Write the Obama and McCain campaigns to push NG as their main energy policy mandate, but explain why instead of hyping. Then list which companies are dominant in this industry. Believe us! This would be the greatest news ever to NG companies and would be a definite decoupling from oil. So, write, write, write. Ask them why the continued ignoring of NG. Is it because the major oil companies have missed out on this? Tell them its an industry that the majors can control with acquisitions and use their experience to maximize natural gas. Explain how NG INSTANTLY relieves a lot of pressure from foreign independence. It is time that ALL investors push NG to congress, because NG is not hope. It is real. It is here. It is a clean fossil fuel. Write to Al Gore. Again, Mr. Gore is the most influential public speaker of energy in the entire world. Explain to him for us to get off oil, we cannot go cold turkey. Instead gradually converting to the cleanest fossil fuel in natural gas. Tell him there has to be a starting point, right? What better starting point than accepting the cleanest fossil fuel? If congress can make oil lose gains via manipulation, then they have the power to do it for real by mandating NG. Ask them why would you use ethanol that has proven to hurt the economy, and not use natural gas.

 

Please take the above paragraph VERY seriously. Look at Carl Icahn. He just doesn’t invest. He takes action in his investments. The internet is the most powerful tool in the world for communication. Start chain letters (not hype letters) of why we could relieve oil pressure today in a hot second with NG, and tell those readers, but its not being done, so congress is not helping YOU out like you think they are. Explain that in terms of gasoline, 1 gallon of NG would cost 2 dollars a gallon compared to gasoline!!! What does that mean? With just a mandate of natural gas you hit a grand slam! You relieve oil pressure. You relieve global tensions between Iran and the US. You do more for the economy than any interest rate cut PERIOD! And that’s guaranteed. If Americans can substitute NG versus oil for many things, they are now doing that for half the price! Be Carl Icahn and participate with action on your investments. Spread the word that we ALREADY have the solution to energy, but no one is doing anything about it. Send this to everyone. Get the word out. Write to McCain, Obama, Gore, your local congress representatives. This is how NG will be the fuel of the century! Not by some hypster like Cramer yelling "This is the year of natural gas," without giving any reasons except its his gut feelings. Trust us, the big players cannot hold back the voice of the individuals. This is how powerful your voice can be with the Internet. Don’t forget how Barack Obama rose from nowhere. He is a product of the Internet voice. If you want NG, the time is now.

 

Most importantly, start getting active with CHK management. If you can be like us, and communicate with them. Visit them. Visit their fields. Ask questions you can ask. Ask local residents around the fields and see if they see true bullishness. CONSTANTLY, write to Aubrey McClendon, and remind him the stock has done NOTHING since 2005 in the biggest energy run in history. Tell him what you want to tell him, and you have to be consistent with this by writing all the time. His team will eventually listen. Trust us. This is a public company. Do you really think Aubrey can get away for another 3 years of bad performance in a commodity run?

 

IN OTHER WORDS, GET INVOLVED! ITS YOUR MONEY AND YOU LOST HALF OF IT IN DAYS! YOU CONTROL YOUR OWN DESTINY. WORK FOR IT. SPREAD THE WORD AND HOPEFULLY WE GET A NATURAL GAS MOVEMENT ACROSS THE USA. AMAERICANS WILL EVENTUALLY RISE!

 

Now CHK can easily snap back to 60, because it is ridiculously oversold. If it does, it does not mean you ignore all the above. Even if it goes above 60! DO NOT GET COMPLACENT. Isn't complacency the reason why you rode the stock down, because you got way to comfortable with your position? You were probably thinking, "I'm so far in the money that I can afford pull backs, and make newer highs." Complacency in the markets or in anything will get you every time.

 

 

Long term CHK is just fine. We have not changed our positions and we are stronger believers in this company today than even a month ago. We know we know. Why is the stock starting to trade as if CHK has made no accomplishments all year? Makes no sense, but these are the markets. They have killed the stock. There's no doubt about that. Now its time for the fundamentals to fight off the shorting, sector rotation, and a weak underlying commodity. They want to take as much out of CHK as they can. Again, we have done this for decades, and we have NEVER seen such a thing. This sell off we promise you will make it to MANY commodity trading books, journals, etc. Might even make economic books. This is a sell off of epic proportions. Not even a pause. Straight down 40%. Granted there was a pause few weeks ago, which was last chance for many to get out in the 60's. CHK will prosper and make a lot of people wealthy, but we do know that many will say, "a lot of stocks will make me money if I hold on for ten years. Why should I continue the CHK story when it really isn't going anywhere for three years now, and the one huge move it had came in one month of hype, and lost it all and then some in days?" We understand all your reasons and points. This is terrible and painful right now. Worst yet, no end in sight, and people ask why hold something when you know its going down more? Why not get out and get in lower? No doubt CHK is the easiest short on the street right now. The shorts can do whatever they want with it right now. The question is when do they get scared of the fundamentals, and CHK's earnings call next week. We truly believe that for the first time CHK's earnings will be a MAJOR mover to the stock. This will be the most important earnings call Aubrey McClendon will ever have. He has more at stake now than ever before. And so does the Snitch! The Snitch truly believes this stock still doubles from these levels despite what many think. If you participate in natural gas and CHK, you can and will make a difference. The rest will be up to the street, and eventually the cream always rises. The financials and the markets will eventually show their true colors, and the cash cow commodity companies will continue to surge. The US dollar is in SERIOUS trouble. Do not be fooled.

 

We hope this has helped many readers tonight. We apologize deeply what CHK has done to investors in just days. It has altered many peoples financial lives. For this alone, we want to tell you how we feel your pain, and hopefully you find ways to cope with it. There is no way anyone in CHK has ever experienced anything even remotely close to this, so we understand the hurt and frustrations as this has to be a new experience for many CHK investors. Remember, it can happen again and can continue. So, only talk why it can get worse and concerns. Talking about possible negatives PREVENTS longs from a lot of losses.

 

Chesapeake Energy will prevail as one of the great American companies and investments ever. This is a company that WILL be recognized by the US government, and everyone in America. Some day, Aubrey McClendon will be tagged in a magazine, "The man who changed the American Oil Crisis." From there Aubrey will get into politics. BET ON IT!

Our beloved CHK energy once again had a miserable week to close at 48.30. AN awful July continues for our gem company. Are we worried? Short term of course. If you are not worried after a 40% decline in less than one month, then we HIGHLY encourage you to get out of the market forever. Being a great investor is about always being on your toes. The worst traders/investors in history are those investors who simply keep their heads buried in the sand, and their main tools are their gut feelings and blind faith. This will kill you long term every time. The great traders started asking questions when CHK was actually SELLING off hard after their Haynesville Joint Venture Conference Call instead of upside pressure. The stock started selling off after the CC, and that’s when traders noticed a trend break possibility. We say it as we see it. That afternoon Jim Cramer made a phenomenal observation, and predicted much lower prices for stocks such as CHK and other energy stocks………He made that prediction the same afternoon CHK had announced the great Haynesville news. Maybe Jim Cramer should have stopped right there, but unfortunately for his followers he didn't as he put his followers back into CHK from 59 all the way to 51. However, that day he made the great call and in after hours CHK instantly went down two points. The morning after on Friday, CHK had shed as much as 5 points in the early trading. CHK came back to recover some that Friday, but the new trend was in play, and that was downside pressure. This was only 24 hours after the Haynesville news. The professional traders knew this news was the catalyst to a sell off, while the amateur traders were celebrating and shouting this is the big one!!! It was the big one. The big sell off. The point we are making is that Haynesville CC and Jim Cramer's observation that for the first time all year HUGE MONEY was rotating out of energy. That assessment was accurate as CHK slid all the way to 58, but once again CHK looked like the king as it rebounded as high as 65.97, which was the last time this year CHK looked like a darling. From there, well we all know the pain. Today, we are still in the midst of that sell off as fast money investors continue to pile up on CHK blindly at every level only to fall prey to the shorts. Why the big rotation on that Thursday out of energy? Because, we were running out of catalysts and reasons why the shares should go higher. Once the Haynesville was announced, CHK ran out of catalysts, bullish catalysts. The only catalyst left was NG prices to stay firm, and when NG wrecked, CHK followed and then some. The professional traders made note of that, and we constantly noting to everyone that we were seeing unusual activity by the best energy traders in our opinion. We said to keep an eye out on the July 55 puts when the stock was near 70 and the options would expire in two weeks! From that point on it was imperative for CHK holders to start protecting their profits from the 60's and there would be no stress to the downside. That’s our assessment how this CHK stock has unfolded in just a few weeks. Once a story has no more catalyst your stock can run into trouble. Now of course we have been in CHK for many years and are our shares have appreciated tremendously over the years, but we are not happy the stock has clipped away 40% in less than one month. We are not blind longs and say well at least we are still up a lot for the year. True. However, wouldn’t be nice if you could have that 25-40% more on top of your statement? Obviously, this weeks commentary is about catalysts for CHK shares to go up higher. Like we said the Haynesville news was a terrible thing for the shares short term as it was the end of catalysts to move the stock any higher. Why? Well, what other news would one expect after the Haynesville for CHK to continue its surge? That type of news would have to been phenomenal. The ONLY news that would still have CHK above 60 today is if CHK would have followed the news shortly by "we plan our Haynesville and future expenses by selling assets." However, what happened was the sell off was underway, and the company once again in the midst off a sell off sent the shareholders another gift from the Grinch, another equity offering. And boy was this the trap of all traps. The stock went down harder, but rebounded off a head fake and went as high as 65.97, and once again longs thought everything was ok, because after all this is the great CHK we are talking about. This offering only set up a trap that longs will never forget ever again. It set up a buying trap of the year. Everyone thought CHK's offering was well received by the street, and Jim Cramer got so silly to think this offering was great. Then it all unraveled in the world of CHK to the point where even great news form the company couldn’t slow down the sell off. CHK did another great deal, this time with powerhouse BP! And then the grand daddy of all news by CHK this year, " NO MORE OFFERINGS FOR A MINIMUM OF TWO YEARS"! Of course this news was to late, but this news is now the NEW catalyst to at least stop the bleeding long term, and this catalyst will be a big part CHK going back up and ripping through a 100.

 

We have said it in many articles our biggest concern for CHK has always been their equity offerings, and the commodity natural gas. Finally, the offering caught up to them, and what worse thing than to added extra massive selling pressure to a stock in a free fall? The offering amplified this sell off. Well, what about the commodity correction and NG falling off a cliff? Isn't that the main reason for the sell off? ABSOLUTELY! CHK was going down no matter what, but the offering definitely amplified the sell off. We know the Midstream deal didn’t work out, etc. However, CHK really started believing that even in the midst of a sell off the street would forgive them yet again for dilution. Guess what happened this time? The epic sell off amplified. So, what did the Haynesville CC do? It tipped to everyone that no more big catalysts to look forward to for more upside movement. It instantly triggered that the company would do another offering. They always do with such news. And keep in mind, if you pay close attention to the conference calls of CHK; Aubrey for a long time has been saying NG would average between 8-10 dollars, and he said this while NG was making a massive run up! That’s VERY important statement by Aubrey, which we will get to. Now you had no catalysts as the Haynesville news is out there, dilution, and the best industry INSIDER telling you NG prices WILL come back much lower! There's your sell off, and all of this WITHOUT even insider information. The professional shorts took these three pieces of info, and made more money on the downside in weeks, than longs have done in years of investing. IT PAYS NOT TO BE INVESTED BLINDLY! Do you see how shorts think versus faithful longs? As soon as your OWN CEO is telling you he thought NG prices were much to high, he was indirectly telling NG would sell off. This is how we got to the 48 dollar level. We are still up a TON on this huge trade, and we hope EVERYONE continues the practice of protecting profits. If you do not do this, then when will you ever? PROTECT YOURSELF BEFORE NEXT WEEKS EARNINGS! DO IT NOW! We believe CHK goes much higher long term, but there is STILL so many hype players in this stock that if CHK disappoints with their earnings, this sell off will start right back up and more painful, because now each point equals more percentage losses. Losing 5 points from the 70 levels isn't that bad, right? How bout 5 points at the 40's level? EACH POINT NOW IS WORTH A LOT MORE PERCENTAGE WISE! PROTECT YOURSELF!  Now we know some of the reasons for CHK's sell off, and why the bubble burst. It happened, so now lets prepare for the time. Oh there will be MANY more CHK runs. MANY!

 

What happened this week? Further confirmation there is a serious underlying problem with natural gas. We are not saying mistakes have been made by these E&P companies, but it seems to many of them have been banking on more domestic use to drive up demand. The key word here is domestic. The problem: The domestic economy CHK lives in, STINKS. That means domestic demand will be very difficult to handle the supplies coming. We are further witnessing why NG has been really a serious under performer during the energy bull market, and that is NG here in the United States is NOT a global story AT LEAST FOR RIGHT NOW! The street is pricing this in as we speak. The beauty here is Aubrey KNOWS this. He has to. You simply do not know NG is going back to the 8-10 range when NG has broken out after many years of doing nothing, and make a statement like that and to be so right. What Aubrey knows is that NG is a domestic story, and the only way demand picks up domestically is further price falls, which would really hurt CHK, because fallen prices would exist in a recession economy, so less profits. You do not want weak economy and weak product price. So, its very important NG starts firming up. The street speaks volumes. Look at the price of oil. Every day people are waiting for an oil crash, and they think it has crashed because it has corrected 15%. Oil is still in the mid 120's, while NG is a few points from going below where it started its run! Oil is a GLOBAL STORY, and oil WILL be above 200 by the end of 2009 whether you like it or not. You are not going to make oil go down long term by trying to manipulate the markets by blaming speculators and changing trading rules. How does that improve the supply side of oil? We are telling and have told you for years, Oil WILL still have its super spike we have been saying for years. NO we have not seen a super spike yet. A super spike is when one of these days you're going to talk to yourself, and say, "wait a second wasn't oil just at 120. What happened?" There will be a super spike that will blind side the economy, and trust us, the Fannie and Freddie government intervention will eventually put the US dollar down for the count for a VERY long time. The US dollar is in SERIOUS trouble. We are dead serious here. When we say trouble, were not saying it will just go a little lower, it might break down so badly that today's prices would seem fine with us. We have said for years buy commodities and avoid the Us dollar and anything related to the Us dollar. We will reiterate this statement again, THE COMMODITIES CYCLE HAS BARELY BEGUN & THE US DOLLAR FALLING HAS A LONG WAYS TO GO! You simply do not change market conditions without the macro conditions changing. No one can give ONE reason for the US dollar to turn around. Sure. It can rebound even for months, but all it will be is a rebound phase. The long term trend for the dollar is down and down big. Same goes with oil and all commodities. Long term trends are extremely bullish. If you think a commodity bull market ends in 10 days of July; oh no no no. Commodity runs do not end unless fundamentals break down. Your best gauge for energy is coal. Coal companies earnings are coming in at 4 and 5 fold! That is absurd. That is DEMAND with supply tightening. An exciting time to be in commodities, and remember it is PERFECTLY NORMAL for commodities to have major pull backs. The commodity bull is based on strong demand and tightened supplies around the world. Just wait and see where oil goes. Of course short term the path of least resistance is for oil to go lower, but we promise you WILL see 6 dollar gas by the end of 2009 and oil 200. There is LESS and LESS oil out there and major exaggerated demand. What about CHK and NG?

 

CHK and NG fell much harder than other sectors, because for the first time NG has decoupled from a global story to a domestic story. In a weak economy, you do not want to be a domestic supplier of anything. Even Costco that sells cheap products is struggling. This is where CHK and NG live in for now. We are HEAVY into commodities and have been for MANY years, and will continue to go long. Of course our premise for this has always been global demand. We loved NG, because we have said for years the oil problem WILL have to push NG into more usage, and that’s how NG will benefit from the global demand of oil. Also, that LNG prices in Europe would surge making the entire world realize what a precious fossil fuel NG really is. For now, however, NG has decoupled from the commodities global story, and that is not good. "It is an interesting and nervous time in the world of natural gas. Natural gas longs keep justifying it is July, and things will change in August. The reason they usually change in August is that you usually get the most summer heat waves in August, and August is the first month that really confirms hurricanes are a real thing, and not a made up story. Natural gas has really broken down, and has made a case for now that the fair ratio of 6:1 won't happen if it happens ever again this decade. The world is recognizing natural gas, and capitalizing on it. Look at Russia. Look at Qatar. It is so obvious why we import so much oil here in the states. Other countries know the game of energy, and we here in the US do not. This is why we are hostage to the Saudi nations. In a way, they control our economy. Could you imagine if nations cut off our supply? It is mind twisting that no one in the states during this entire energy run has made natural gas the top story. That’s why we are amateurs when it comes to energy production, and why other nations are experts. Russia and Qatar know the significance of natural gas and the future of natural gas in the world. We can be right up there with the big ponies in the natural gas race, but we are to worried about oil speculators. What a joke our congress is becoming. Are we the only people in the world that doesn’t understand supply/demand, and think we are running out of oil, because of speculators? Our people are just crying like babies right now. Americans still have no idea about the energy problems. Boone Pickens must have been sick to his stomach when he went to congress to witness how unaware these people really are," Aaron Rossman, an energy trader.

 

What Mr. Rossman is saying is that the United States has an opportunity to position itself this century as a top energy producer just like other leading OPEC countries. Did you ever think that could have been possible? Not likely, but here we are. We are about to get into a phase as one of the dominant natural gas countries! We can go from 70% dependent on foreign oil to shedding that down to the 30% range within a decade or less, because of natural gas. America has always been such a fortunate country. In the middle of an energy crisis, natural gas has fallen right on their laps. So much that America can call the energy shots in the future once they establish natural gas a major fossil fuel for the world.

 

With NG prices continuing to plunge, it is only confirmation that we are getting over supplies, and that congress continues to ignore natural gas. Who would have ever thought with oil going well above 100 that natural gas demand wouldn't have sky rocketed to exaggerated levels? It would have, and it will if congress and this country start realizing we can be a natural gas role player in the world. Instead we have the best energy icon in the world in Al Gore, who continues a fairy tale. As long as we continue the Gore fairy tale to go to zero fossil fuels, it is going to be difficult. Al Gore has mentioned natural gas, but it seems Gore is still prejudice towards it, simply because it is a fossil fuel. He has acknowledge it is a better option, but since NG is a fossil fuel he has a prejudice towards it. Also, why does such an intelligent man go to such an extreme instead of a balanced rational plan, which is to use LESS carbon fossil fuels? How can Mr. Gore think America, which is the highest consuming energy fossil fuel country in the world can also be the lowest consuming country in the world in a decade? Think how funny that statement is. That is ridiculous. Now imagine if Gore caves into this fairy tale, and realizes that we can significantly lower carbon emissions WITHOUT losing our energy needs with the fossil fuel natural gas. Why are we continuing to reference Al Gore? We believe Al Gore has 100 times more weight in the story of American energy than Boone Pickens! Trust us- if Al Gore pushes NG tomorrow, NG would sky rocket. Boone Pickens came out with his plan about a month ago. Since Pickens came out with his plan, natural gas has plummeted. Of course for macro reasons, but one cannot ignore the fact no one is really listening to Pickens for now. Very important to say for now as we believe Pickens will eventually make his mark. There is a SERIOUS energy crisis around the ENTIRE world. No government is proud to use coal, but coal demand is out of this world. Doesn’t Al Gore want to stop the bleeding for now by at least converting coal dependence to natural gas dependence? By the demand for coal we know how early in the game this energy crisis is. Sure oil may go down near term, but oil will have its super spike by the end of 2009. We are not saying oil will hit 200 five years from now, we are saying within 18 months. Once the Olympics are over, China will realize that their economy just got another push. The Olympics will bring endless money to China, and even more important during the Olympic month, does anybody realize how many business deals will be made in China from people around the world? Does anybody realize how many people will go home and say, "Oh boy. This China growth story we always hear back home is for real. I just got back from China, and they are taking over the world. We need to establish presence in China." That’s going to be the sentiment. The Olympics will confirm China's rise. China which is a conservative business nation will go into a second gear after the Olympics, and they will drive oil into a super spike within 18 months. Oil will not stay below 100 because it makes Americans so happy. America is no longer the central world figure player of the past. Oil can easily dip much further and temporary even below 100, but longer term prices will rise sharply. Congress is doing EVERYTHING to be in a denial of an energy crisis, and acting so childish by pointing towards oil's rise as artificial. This makes no sense. It is embarrassing for our congress to not admit to a supply/demand issue, but instead want Americans to believe in an artificial rise in oil. WRONG! What was artificial was your dot com bubble. What was artificial was your house prices going up while jobs were dropping and the US dollar dropping! That was artificial. OIL IS NOT! Face the music NOW. Once congress has to face and tell Americans, "we were not prepared for an energy crisis, but now we are willing to take it on," is when NG becomes a major player again. Congress CANNOT go against the NG story, but NG longs NEED this to happen. If not, then NG companies must make their OWN destiny and weather like Aubrey says.

 

How do you increase the price of NG to 20 dollars and double demand in a second? NG companies coming together to build LNG plants. It is that simple. Eventually NG companies such as CHK will take this route, and it will bring billions to these NG companies. Who gets hurt? Americans. The price of NG would go up, because supplies would tighten as NG gets exported. These NG companies are the ONLY companies in this energy crisis DRILLING, DRILLING, AND DRILLING! Yet nobody is viewing them as saviors and heroes of the energy crisis. Instead they are being VASTLY ignored. Embarrassingly ignored. The entire country keeps yelling drill drill drill. These companies have been and have been BEYOND SUCCESSFUL for natural gas. They now will have the fossil fuel. They will say we did our part for the country and our companies. We are producing amounts that are DANGEROUS to our company if the USA wont step up demand, because the over supply would crush NG prices. If this ignoring of NG goes on any longer, we will eventually get announcements of LNG plants no doubt. This is America's chance to be like the Saudi's in one phase of energy, and these companies will capitalize. These American companies want ALL the production for America's use, but if America is scared to take this route and continue foreign dependence, then we will see our NG leave the US sooner than later, and instead of all this NG production helping the American energy crisis; instead it will do the opposite as NG prices will soar if our American NG companies start exporting.

 

This week CHK reports earnings. Once again going into this week we are highly discouraged again that quick non home work traders with no patience are betting heavy on CHK yet again for another week. This high optimism continues to kill this stock as these traders bring in weak hands. Traders who think making money on Wall Street comes easy and fast. Traders who want to make money like the long term investors in weeks instead of years. Keep in mind we have been in CHK for many years, while these type of traders expect to get same returns as us in just a few weeks simply because they heard a tip about CHK. The street in the options market once again is betting heavy on CHK this week. EVERY SINGLE week in the month of July the street has had high optimism for CHK, and every single week the optimism turned into a nightmare. This is a key sign that this stock still has to much hype around it and to much weak hand investors in it. It took us years to get a double off this stock, but these investors want to get a double in a few weeks. Wall Street doesn’t work that way. Las Vegas does, and these Vegas mind sets are heavy in CHK. So, what happens as a detriment? Because, these investors are so weak handed, any short fall by CHK; these investors INSTANTLY sell, and the selling pressure brings in the professional shorts, and the selling frenzy amplifies. The good news is that many of these fast money traders have been caught in this massive sell off, and have been converted to longs without wanting to. However, the stock fell so fast and they lost so much so quickly, they want to recoup some of their losses if not all. The natural gas story continues to get ignored by the government, but is the total opposite on wall street. NG was the most hyped up story of wall street all year, and now we are witnessing the side effects of the hype. Jim Cramer hypes and makes a lot of bold statements, but in all his years, he has never made aggressive calls and bold calls like he has in natural gas. Now Cramer's head is spinning and wondering what happened? He will not even dare talk about NG right now. Not once has he come with a theory and try to defend NG. Instead he has become very quiet on the issue of NG. He is actually talking more about wind and solar than NG right now. He spent months talking up thee E&P companies and the so called WildCatters, and here he is witnessing one of the greatest NG sell offs in history in such a time span.

 

What does Vegas Sports Entertainment think happens this week? We do not invest on a week to week basis. Same goes with sports. We are not worried about every day results, but where we stand long term. We do acknowledge this is the BIGGEST week in the last five years for natural gas players. Maybe even ten years. We truly believe this week will give us answers very quickly where natural gas is going. We will most likely start getting answers why such a NG plunge. NG always goes down in July, but this plunge is much more than a July issue. We believe we will find out fundamental reasons for the price of NG collapsing. However, we think the price of NG collapsing might be a HUGE breakthrough news for Chesapeake energy and even other NG companies. We believe that a major reason NG prices have been going down is because many of these E&P companies increased selling pressure of NG by hedging record amounts. These hedges triggered the NG market into a selling frenzy. We will see many NG companies with record amounts of hedging, ESPECIALLY Chesapeake Energy. If this announcement is made this will be very bullish for the NG companies. It will validate these NG companies and natural gas itself. Once the news comes out, and the street puts the story together, companies like CHK should start to run back up to normal valuations. So, why is this great news or can be great news? Well, if Chesapeake comes out and says they picked up their hedging pace; why do you think they hedged so much? Because, they quit believing in the NG story? ABSOLUTELY NOT! We have said this since May, and will say it again: NG PRICES FALLING RIGHT NOW IS A TESTIMONY TO EXTREME SUCCESSFUL DRILLING RESULTS FOR NATURAL GAS & THE STREET IS PRICING THAT IN RIGHT NOW! If you want to know if CHK is having success in Haynesville, you ALREADY have your answer! Look at what the NG prices are telling you. They are telling you massive production is on its way BECAUSE OF EXTREME SRILLING SUCCESS and actually EXCEEDED SUCCESS! And once CHK validates this is the reason why NG prices are going down, but they have further protected themselves with hedging; off to the races again for CHK! IT IS THE NG COMPANIES KNOCKING DOWN THE PRICE OF NG BECAUSE THEY HAVE CREATED A BLOATED SUPPLY MARKET! However, the these NG companies can make this price action work for them if they validate their hedges and acknowledge they KNEW prices would fall down.

 

Aubrey is the master of this industry. While everyone was crying why Aubrey hedges so much, and while everyone was saying NG is going to 16; Aubrey kept hedging and hedging and stuck to his guns and said NG would be in the 8-10 range. He was right. Which means he was right with his Haynesville success. Which means Aubrey has probably set hedging records this past month, and possibly CHK was a huge driver of the NG market to tumble. If CHK has hedged and triggered a NG sell off; CHK may have started a serious war in the NG market. CHK is finding more gas than anyone, and hedged more than anyone, and may have triggered lower NG prices? What better way to destroy your competition? Aubrey's not taking any prisoners. We are already witnessing NG CEO's extremely insipid towards him. Why such a bad sentiment towards Aubrey? Think about it. Why would Mr. Simpson have such insipid feelings towards Aubrey, UNLESS Mr. Simpson KNOWS Aubrey has now leveraged CHK while hurting other companies. Mr. Simpson's antics for an EARNINGS CC was a dead give away that Aubrey is victorious in something for sure. And the only way Simpson is trying to fight back is by bickering. Use your logic. You do not as a CEO of a major company bicker like this UNLESS your opposition has become victorious in something. We will find out what Aubrey's victory is. This can turn out that Aubrey is eating up the competition with gas production, and at the same time depressing NG prices that will hurt his competition way more than him. This week comes down to how much is your NG company hedged? If the hedges are in place, and with great production results; CHK will run again, but this time without a bubble mentality, but on fundamentals and valuation. Hedges will buy these companies plenty of time to see how the new supplies will be used with demand. We will stick to our guns and believe that CHK was one of the MAJOR if not the MAJOR reasons why NG has been falling off a cliff. CHK's Haynesville production is showing more than great results is your first reasons. Your second reasons is because of the first reason, in which CHK's great results had CHK locking in great NG prices for their production and CHK intensified the NG hedging markets, which triggered a domino selling effect as other E&P companies jumped on the hedging bandwagon. NG will rebound still, and NG will be in the 8-10 range. Remember, if NG stays in the 8-10 range this is classified as a HUGE bull market for NG. NG moves in a price range not a breakout range. The price range for many years has been 6-8, but mostly in the 6-7. So, if our new range is confirmed to be 8-10 long term; everything CHK needed to happen has happened. Remember, in the 8-10 range NG demand picks up again meanwhile with higher hedge prices, and the time to come out with the news that will send CHK to the moon and never look back: Partnership for LNG plants or a major comes in and takes CHK over as the majors have the resources to do whatever they want to do with the new NG production.

 

 

Final Note: Do not sleep on the BP deal. BP is a WORLD MAJOR. A WORLD MAJOR. BP's partnerships in Russia are falling apart every single day, and getting worse with the Russian market problems. BP is also learning they are getting the lower end of the deals. BP is trying everything for its NG presence, and if they are close to quitting with the Russians; you don’t think they will find a replacement? For a MUCH bigger deal than 1.75 billion. Its great CHK has been getting attention from other companies, but BP is different. They are at the top of the food chain. Their deal with CHK means they KNOW everything they need to know about CHK, which means they STILL have their eyes on CHK, and this time for a LIFE CHANGING DEAL!

 

Make sure you are protected before earnings this week. We are still in the midst of a MAJOR sell off. Last weeks low was 45 after falling almost 30 points, and the best CHK could bounce is to 48? That is VERY weak action. A lot of weak short minded hands are in this stock still. A lot of get rich mentality still in this stock. So, from a stock action short term this stock can still be very dangerous. Long term we will stick to our triple digit price targets within the two years. Right now every analyst in the world says buy CHK, every novice investor is in CHK. These are details professional hedges love and prey around to short and start a selling frenzy. Also, coal stocks started their recovery in an aggressive fashion. Imperative NG stocks do the same this week. If CHK can get stability in the NG markets, and the conditions we outlined above; this stock can regain its losses in a hurry. This stock will circle again. It circled all the way down to the 40's. Did you ever think the 40's would ever be a possibility when we were just in the 70's? NO WAY! DO you think the shorts are even thinking of a 74 retest? NO WAY! This will retest 74 easily. We just don’t know when. A very big week for CHK and the NG markets. Might be the biggest week for CHK in many years. They need to establish what their FUTURE position is, and Aubrey MUST give his views where the NG market is going and why. We ALREADY know Haynesville will be an EXTREME success. The street has confirmed that. Now we need to know what CHK has done about it, and how positioned for the future. The key words to the week: HEDGES, LNG, NG EXPORT, HAYNESVILLE, PRODUCTION

 

Key phrase for CHK investors: PROTECT YOURSELF. DO NOT BE IN FAIRY TALE DENIAL. Of course you cannot picture the stock much lower: IT CAN HAPPEN, SO PROTECT YOURSELF! LEARN FROM YOUR MISTAKE OF JUST A MONTH AGO!!!

What does Wednesday's oil action mean? Nothing. Absolutely nothing for those who know commodities and MACRO ECONOMICS. The fact that 90% of investors on Wall Street need to find better strategies when evaluating commodities. While oil hit a three month low just this week, we came out and GUARANTEED oil will close at 200 or above by the end of 2009. Its this simple: We said China shutting down their ramp in energy for the Olympics would definitely cause a fall in energy prices, but once the Olympics are over; China will go to OVERDRIVE and will stop for NO ONE, especially the United States! Folks, this is the commodity markets. Commodities are a different animal. Its for long seasoned investors who think from a MACRO level rather than day to day micro level. From a global MACRO level; give us ONE reason why commodities will go down anytime soon. There is NONE. ZERO! We don’t know how many times we need to stress this: the commodity bull market is NO WHERE near even half way. And trust us, the dollar decline is NO WHERE near the end. Oh so you think the government did the right thing with Freddie and Fannie? Say that in a few years when your dollar can't buy you bubble gum overseas. Oh we are not kidding. This is so much uglier than anyone can imagine. As for oil; wow is all we can say. For such an advanced country; we have ZERO energy policies in place for any relief. Of course, the relief WILL 100% be natural gas, but its embarrassing that we have to go to congress today to tell the natural gas story when CHK investors knew this problem was coming MANY YEARS ago. TODAY we are still educating congress what natural gas can do. How can congress not be prepared for this while oil touched near 150? At what point will they take action? Oil 200? It is amazing that congress is just now learning and understanding natural gas now. Of course, the Snitch saw this coming as well, and the Snitch specifically said, "NG prices going down right now is not such a bad thing, because it is TESTAMENT that the Haynesville is BEYOND a success." And this is EXACTLY the reason why it has been going down. This is EXACTLY the reason we say the huge July 55 put by one of the best energy traders in the world, because he KNEW the Haynesville would kill NG prices short term. The Snitch was on top of this and called it exactly how it happened. And what has the Snitch been saying last few weeks? That the shift in NG is NO LONGER what is your production, but rather HOW WILL YOU SELL YOUR PRODCUT? We said this long before Aubrey started pushing NG to Washington by constantly telling all NG investors to TAKE ACTION NOW by writing to congress and all political figures to learn the NG story. And when people laughed, we said; "CHK and American NG companies will SERIOUSLY look into LNG and exporting options. Why? Because, we have enough NG supply for a very long time, and these NG companies if ignored here in the US will sell it elsewhere." And of course this is the EXACT sentiment we saw in Washington Wednesday, and now we see a China company showing interest in CHK. Just knowing about CHK all the way from China is ENOUGH bullishness for us. CHINA is responsible for 45% of the oil demand currently in our opinion!!! What to look for CHK in coming weeks/days:

 

 

Earnings Report raised production as high as 25%!!! This alone is worth about 12 dollars to the share price SHORT TERM, however right now the world of NG is NOT about production, but how will you sell your production to the market? Remember, just like in retail; its all about selling inventory. Having inventory is no use when you cannot sell it. So, short term this production number might not be of any help, however this number is INCREDIBLE and long term this number will equate into the share price.

 

_ Expect CHK to discuss their hedging. We have now talked about hedging for a very long time. While NG was running close to 14, EVERYONE was crying why CHK was hedged as it was preventing CHK from participating in a bigger way with higher NG prices. We backed Aubrey Mclendon from day 1 and we actually quoted, "Aubrey hedging NG will show his genius once again, and validate that he is the genius of the NG industry. While other CEO's want to maximize with greed, Aubrey is locking in great hedges at these high prices, and he WILL BE 100% right long term for locking in." Of course, Aubrey was right, and now EVERYONE is happy he hedged. We will say this again like we did way back in May when we said, Haynesville will be the catalyst of lower NG prices. However, if Haynesville causes lower NG prices, for once lower NG prices will be VERY bullish for CHK long term. Why? Because, lower NG prices VALIDATES the reality and success of Haynesville. The street is VERY smart, and for NG to drop more than any commodity in an era where NG will be the next boom; the street KNOWS and believes the Haynesville reality, and the street has priced in EXTREME Haynesville success. The big news that could set CHK back to the races more than anything is increased hedging this past quarter with very high NG prices. If CHK increased their hedging much more than in the past; this stock will make a new 52 week high by December. What else can increased hedging do overall for CHK and the industry? OK. Listen carefully to what we believe is happening:

 

We believe CHK has hedged substantially. CHK is a natural at hedging in the first place, and they are great at it, but this time CHK had INSIDER INFO that is not considered insider info. Perfectly legal. What was this insider info? HAYNESVILLE! CHK knew all along how successful Haynesville will be, and knows it can oversupply the markets. This piece of news gives CHK the inside route to know hedging at the high prices of July is a must. So, CHK hedges and hedges protecting their production and shareholders, while CHK's Haynesville hurts EVERY other NG player with lower NG prices. Folks, CHK is taking down other companies in a planned fashion whether you like it or not. CHK will be the Microsoft of the NG industry, in which they will dominate the industry, crush its competitors, and BLIND SIDE its competitors. We have said this before, "Aubrey will be crowned within 5 years as "The man who saved America's energy crisis." But, he will also be crowned in the industry as, "CHK. The evil empire." CHK will be hated amongst its competitors. How can they not. They just CRUSHED NG prices while they were hedging all along. Folks, the evidence is always there. You DO NOT need inside info to figure out the markets. You just need to know how to put stories together. For example:

 

When Aubrey announced Haynesville, that was enough info to know oversupply will be a possibility. Oversupply means lower NG prices. Aubrey owns Haynesville, and hence Aubrey's the first to know possible oversupply. Right there knowing CHK loves to hedge anyway; is a sure give away CHK will hedge big time at high prices. Next: Knowing the Hayensville news, you knew lower NG prices were coming, and if they did come, you knew that only means the success of Haynesville. If Haynesville wasn’t getting great results, NG would still be running up. So, now you know Haynesville is a success with CHK hedged at higher NG prices! However, CHK's competitors had no clue of the reality of Haynesville, and some actually thought it was hype or could be hype. Hence, they ignored the Hayensville news. Besides, if theyre not in Haynesville, they have no way of knowing what's really going on. Make a long story short; Haynesville is the real deal, and CHK's success in Haynesville BLIND SIDES the price of NG and BLIND SIDES profits for NG companies (This is why XTO's Bob Simpson is crying literally and talking about CHK on their own earnings call instead of themselves! HE IS VERY MAD at Aubrey!). To the point that the NG companies that are not hedged can be in trouble. How? Over supply of NG (because of Haynesville) can lead to much lower NG prices, and those NG companies that are not hedged; OUCH! Do you see how CHK played this game? That’s how you play chess and crush your competitors. Evil, eh? Welcome to the world of oil and gas, where you have to be the best positioned when your time comes, and the NG boom is coming VERY soon to a location near you.

 

Aubrey now with Haynesville has much more options OVERSEAS for exporting. People laughed when we said domestic NG to be exported. Well, if the United States doesn’t ramp up NG use with policies; you can bet your life many foreign energy companies will INSTANTLY, and we mean INSTANTLY offer deals with CHK to build a LNG plant in a HURRY! And besides, you get much more bang for your buck in the LNG overseas game than here in the US. So, you see; this is one oversupply story that CHK L-O-V-E-S!!! And so do we! Why? BECAUSE IT IS US WHO CONTROLS AND OWNS THE OVERSUPPLY! But, Aubrey in the earnings will address the oversupply and MUST outline how he plans on selling it to the market, but he really needs not to, since we have told you his choices.

 

We believe because NG is so undervalued in a commodity bull market that NG will go much higher than the 11 dollar maximum Aubrey is calling for. However, long term we still believe the new range is 8-10 or even 9-11. We need 5 more months of above 8 dollar NG, and if we hold above 8; CHK will INSTANTLY run. Why? Because, commodities respond MOST to new price ranges than ANYTHING else. Once a higher price range is validated and confirmed; the commodity goes minimum 25% higher under the circumstances in the bull market. MINIMUM 25%! Many are losing the NG price range importance. It is more important than anything else in the world of CHK. IT IS EVERYTHING! Keep in mind the price range for almost TWO YEARS has been 6-8! And now we have an opportunity to validate an 8-10 or 9-11 range? WOW. WOW. WOW! TRUST US, in the world of NG, a two dollar jump in price range is as big as it gets. Much bigger than much higher prices ranges short term, because very high prices would be tagged with speculation, and many traders wouldn’t dare touch the commodity nor the stocks as it would be classified as a bubble, and it would eventually burst. We have already experienced one CHK and NG bubble when the NG price went up far to fast. However, when you go up in a two dollar price range, and that range is proven for at least 7-8 months; that’s EXTREME BULLISHNESS. CHK's greatest run ever will be once this price range is validated. It is all about NG price range, and TRUST US if we stay above 8 dollars for another 5 months; on the 6th month you will see the REAL run in CHK as it will confirm a true price range PLUS it will confirm the start of the NG boom, because the higher price range confirms that even the oversupply didn’t prevent a new price range. Very easy equation: HIGHER PRICE RANGE + OVERSUPPLY= BOOM COMING!!! If your product is increasing in price while supplies are increasing, there's nothing more bullish than that in the world of economics. Of course anything can go up with low supplies. That’s a no brainer, but imagine something going up with high supplies? It means the world wants that product and will only want more and more and more.

 

Again, while everyone thinks oil is headed much lower, we still virtually guarantee 200 dollar oil by the end of 2009. China will ramp up demand and will love to see this hurt America at the same time. What better way for China to position itself as a superpower? They are growing in double digits per quarter. As high as 11.5%, meanwhile the US is hardly growing. Imagine China growing at 11%, and in the meantime they know higher oil prices can only weaken the US. This is an indirect war of China attacking the US without the US even knowing it. You want to know why American consumers are hurting? China is indirectly crippling the economy, and we haven't seen anything yet.

 

THE COMMODITY BULL MARKET IS STILL VERY EARLY. MUCH EARLIER THAN ANYONE THINKS! PLEASE THINK FROM A MACRO LEVEL AND NOT ON A DAY TO DAY MICRO. How the heck can this commodity run end when NOTHING has changed from a global MACRO level? Wake up America. It is a weak, ridiculous, childish effort to try to get the prices of oil down by controlling the markets via speculators! How weak is that? How embarrassing is that? That’s your answer to high oil prices? That oil is to high, because of speculators. What a joke. How bout take REAL action versus high oil prices instead of wondering why its high. Doesn’t any politician in America visit China or India? All you need to do is go to one of these countries just for one day, and we PROMISE you will come back, and probably buy as much commodity stocks as possible. China and India DEMAND is for GIGANGTIC REAL! Trust us. We see it. Sure. Commodities might still go down sharply, but long term they will snap back and make higher highs. We said this is what will happen to CHK long term. CHK went from 35-70 range. That’s your double. It snap backed to 45. So, next double move should take it to the 90 range eventually. Of course long term, and not tomorrow. This is how commodities work. It is VERY painful when the pull backs are in place. But, this CHK pull back only confirms the next double move, which is awesome. Of course, this holds true if 45 is the bottom. We are not out of the woods yet. Now the next move should be a fun one as we head to the 90's range, and probably get a sharp pull back to the 60 range, and then to 120. However, that’s a LONG time away, and a lot of dynamics can change until then. We are not day traders nor chartists. So, when we say after 90, it'll pull back to 60, that is just an example of how commodities can work, and act. Not saying that is what will happen, but we are saying CHK (if 45) is bottom, will make its move and way to 90.

 

PLEASE BUY PROTECTION THROUGHOUT OUR CHK RUN TO A 100! WE HOPE YOU WILL NEVER RISK YOUR PROFITS EVER AGAIN WITH GREED AND EURPHORIA! Most importantly, do not be so amateur to only use and believe in hyped bias. As Warren Buffet believes in, no investor will ever become successful that doesn’t pay more attention to the downside possibilities than the upside. The best investors in the world think of preserving cash. Don't be so egotistic as if you KNOW CHK so well, and no one needs to tell you anything. You did not discover CHK! Right now everyone and their mother owns CHK, so its not your ego story of how you unraveled a gem. Put your ego aside, and realize the negatives, and the bad things that weighs on CHK. And unfortunately, there are BAD things. If there wasn't we'd be at 150 already. Every stock has BAD things. Some more than others. CHK is not immune. Believe it or not, we can list MANY, but investors calculate if the upside outshines the downside. That’s why we have invested in CHK many years ago. However, as the price gets higher, any sensitive negative news effects it with more intensity. For example, if CHK announced an offering tomorrow; we GUARANTEE the stock would go from 51 to as low as 33-35 with the offering. However, CHK has NO INTENTIONS of any offerings for a MINIMUM of two years! That’s phenomenal news. Again, if any of your investor friends, etc or whomever ignores and doesn’t want to talk about the negatives or possibilities of negatives; DO NOT TRUST THEM! That is a classic and we mean classic PUMP & DUMP artist. They claim they are rooting for you with ONLY one agenda; to dump the shares on you once their price target hits. NEVER EVER EVER trust ANYONE that runs away from bad news, gets angered at the possibility of negativity to the stock, ignores bad news in denial. These people are pump and dump artists and this is why you NEED protection at all times, because these people will dump at any run, and then keep buying back lower. They pump. They dump. They make money, and they do it all the way forever until their long term price target hits. There is nothing worse in the world of stocks than these type of people. MUCH WORSE than bashers/shorts of stocks. We are addressing this with intensity, because CHK is an EXTREME OVER POPULAR stock, and the volatility will continue, and popular stocks attract the biggest scums. Remember, if "they" keep touting the stock even when the stock is getting crushed, whether you like it or not, they are dumping the shares on YOU. Only trust those who show both sides of a story equally. We know Wall Street better than anyone, and we are invested in CHK beyond extreme; and we have ZERO problems attacking CHK when we see reasons too, and the world knows we are one of the biggest CHK shareholders from many years ago. PRESERVE YOUR CAPITAL ALWAYS & NEVER TRUST A LONG WHO RUNS AWAY FROM THE NEGATIVITY. They are professional pump and dump artists that will only hurt you. They will make sure you and everyone holds onto the stock while they keep pumping and dumping.

Why is the Snitch so Bullish on CHK more than Ever?

 

We are witnessing a HUGE sector transition for the last month from commodities to financial and over all general market. People are throwing money at everything, but commodities. Even the US Dollar has been rallying and at a 7 month high versus some currencies! The reality is that this market is acting like a a total joke. Exactly, what Warren Buffet said 3 months ago; this market is a temporary circus, because of hedge funds, who don’t invest and only play momentum games in the markets. They beat up downward momentum and vice versa. How long can this last?

 

We believe this will be coming to an end soon. While the world thinks oil and commodities were a bubble, we believe this is a typical commodities correction. These corrections can last a very long time. Even a year. However, once they get going again they have much higher floors for their next launch. Oil launching from 90-110 dollars for its next launch is certainly higher than launching from the 60 floor last time out. This is how commodities work: NEW LAUNCH LEVELS! Of course, there needs to be catalysts for there to be a launch in the first place.

 

We said it before the Olympics that China shutting down will be a HUGE factor in commodities, and it is proving to be correct. It will be the EXACT opposite once the Olympics wind down and China picks up their production in their economy. The numbers will be exaggerated to the bullish side. Remember, we have China accounting to 40% of the energy long term demand side. And when you take that 40% away for a month; what did you think would happen? Once China picks up, the commodities at MINIMUM will end their bearish slide. From there going into Winter, you better believe it that energy will pick up. This is one piece of the puzzle. What about fundamentals?

 

Okay. Like Warren Buffet says, these hedge funds can try and play these games for as long as they want. Eventually they will get burned, and blow up. Why is it we always hear stories of hedge funds blowing up? Because, they are simply always playing with fire. This new fire, short commodities and put clients in financials, etc. At some point this will blow up and probably worse than late Spring early Summer if you were in financials. Fundamentals will take over like they ALWAYS do long term. This is why the markets aren't a day to day game. It is long term. Long term the markets take care of the every day silliness like you are witnessing now. FUNDAMENTALS WIN IN THE END! That’s guaranteed. Take a look at what's going on just today in the world of natural gas. You have three companies that reported today. PXP, DVN, and HK. Go head and check out their earnings report. They embarrassed the analysts expectations. PXP beat by 23 cents and gained over 700% on the earnings side!!! Stop and think about that for a moment. The company did 25 million in the 2nd quarter in 2007. They did over 202 million in this years 2nd quarter! That is the business that CHK, and all these natural gas companies are in. Look at DVN and HK as well. Heck, look at CHK's earnings! Of course, the street wants you to think otherwise and confuse you with CHK's hedging numbers as if it matters. It means ZILCH!!! As it is UNREALIZED. Look at these earnings. They are astronomical. Yet, you want to sell them off only because they went up and the usual favorite stocks went down this past year? You wont be able to sell these off forever, and guess what? For the next move up, all these stocks for the most part have a much higher floor. We said it before, CHK's first floor was 35 and it did a double to 70. Now this floor in the mid 40's will get the double of a 90. This is the stock market. Not the casinos, and people are getting trapped by watching the daily mess. There are millions of people who got trapped and bought Freddie and Fannie during this sector rotation!!! Did you see what the earnings numbers were for Freddie Mac? Absolutely atrocious. Yet we are to believe these are the stocks to be in? PXP is MAKING money and GROWING while NO ONE has any idea how in the world even the best banks will make money. NO DOUBT many of these banks will be the best bargains probably ever in the stock markets, but WHY TURN THIS MARKET INTO GAMBLING? Why not stay invested in companies that offer value, growth, and earnings? Its that simple. It can be frustrating right now, but come on, long term who's going to do well, an investor in a company that makes money or the investor in a company that has a 50/50 chance of going under? This is the BIG catalyst now. The catalyst of earnings and growth will eventually disconnect these companies from the actual underlying commodities they are connected to. The reason the commodities are effecting these stocks so much is because the market simply wants to see these commodities stabilize instead of so much volatility and uncertainty. Once oil proves it can stay firm above 90-110 level and natural gas stays firm above 8 dollars; these stocks will fly. Its hard to fly when the world thinks these commodities can crash any day. As funny as it sounds, the majority of traders panic to thinking that. The catalyst for CHK going to a 100 wont be much higher NG prices. It will be FUNDAMANETALS, and with today's earnings in the natural gas sector WITH VERY BEARISH EIA numbers, yet natural gas sector up big; tells us for the FIRST TIME all year these stocks are trading up on fundamentals, and a possible disconnect of the stocks nervously trading to what the commodities are doing. A bottom is in play here more than likely, and the launch to a CHK 100 is probably happening right before our eyes. Stop and think how cheap this stock is. Did you ever think you could buy a SUPER GROWTH stock as a VALUE play? Folks, there's usually two types of investing stocks. Either growth or value. How many stocks offer BOTH? Keep in mind CHK has become VERY popular and the most popular in its sector. How that happened out of no where when no one knew this company for the longest time; is amazing in itself. The point is, popular stocks usually lag and under perform. That’s simple facts. Popular stocks are owned by the worst type of investors proven. They look at the price action every day. They look at tick for tick as if it will change the outcome. They look at their tickers as if it’s a sporting event, while the true long investors are enjoying their day. These investors flock to popular stocks, and it’s a feast for the hedge funds and market makers to frustrate them and short them to exasperation. In time this under performance should correct itself as the above investors are long gone. In the mean time, have lots of patience. LOTS OF IT! Stay away from options and buying on margin. Doing that, you will ALWAYS have your CHK shares. As long as you have the same amount of CHK shares, don’t worry about the price. Prices cycle and change, as long as your shares remain constant. Eventually, your price WILL come. When? No one knows, but it WILL come. The key is, will your shares be there when it comes? Staying away from margin takes away the time clock. Keeps your shares protected, and takes away stress. Sit tight and enjoy CHK going to triple digits. And we hope you learned a lot of lessons with this violent correction.

Last week we said CHK had started its bottoming process and that we are witnessing a commodities correction, which is healthy and normal, and not a sell off. A sell off means an end to a run. A correction simply means, a breather, and MUCH higher highs to come. We said to buy a ton of CHK again at 45 as we did, and that we are witnessing a silent run to CHK 100. While many are screaming Oil 80 dollars, we stick to our GUARANTEE oil will hit 200 dollars by the end of 2009. There is no way commodities will be lower in 18 months than today, and no way Oil will be below 150. It is not rocket science. How many times do we have to emphasize that THERE HAS BEEN NO MAJOR OIL FINDS IN ALMOST HALF A CENTURY! What part doesn't the street get? It is IMPOSSIBLE to have a bubble when the product is FINITE!!! IMPOSSIBLE. Take a look at Exxon's most recent quarter. PRODUCTION DOWN 3%. Production is ONLY going down in oil. This is as easy money as you'll ever make in the markets if you remain bullish on commodities. Commodities: read very carefully- COMMODITIES WILL BLIND SIDE THE WORLD WITH A PRICE SHOCK NEVER IMAGINED! Even worse, the United States will get blind sided the worst with Oil 200, and Gold going much higher. The U.S. dollar is a FLAWED currency. The U.S. dollar rally is the biggest suckers rally of the year. It's as funny as many suggesting 60 dollar oil. Wake up America! You WILL NOT solve the Oil crisis without any action except for pushing market paper prices down. That wont work forever. It will backfire. You wont correct the U.S. dollar problems with quick fixes in the markets. We said it a month ago, and we got mocked at as financials continued to rally and energy continued to get crushed. We said: Go head and buy the Fannie and Freddie's of the world. Go head and believe the financial rally. In the end not only will you lose profits, but you will lose it all. We said please don’t get suckered by the financial rally. We said to stay with energy. You will be rewarded handsomely. Its very easy. One sector is growing at record levels, and the other is losing at record levels, yet the losing one is rallying? Well, finally rationale is coming back slowly into the markets. As much as the government is trying to stop the financial bleeding by MANIPULATING the markets, they cant hide the truth forever. You cant prevent 200 dollar oil without finding new MASSIVE oil reserves, and you cant bring the financials back to life by preventing shorting of their stocks. The US government needs to understand to think long term instead of short term. What has changed overnight for oil to go down and the dollar to go up? What has changed for CHK to get crushed and banks to go up? NOTHING NOTHING NOTHING! In the end, the financial story will get uglier, and the energy story rosier. Its time America wakes up and realizes overseas countries have been paying for 5-7 dollar gas. Its time America prepares itself for it, instead of hoping the oil crisis is over by trying to push down the oil markets via paper to 60 dollars. It doesn’t work that way. You want lower oil prices, you need to take action! Such as mandating natural gas immediately! Oh…..and YOU WILL sooner than later. Not because you want to, but because you will have NO choice. This oil crisis hasn’t even begun. Oh no no no. Anyone that understands commodities KNOWS even a 55-60% pull back is normal. We said this before and we will say it again: commodity pull backs ONLY set up the next leg up. For example, on the first leg CHK went from 35-70. Now on this leg it will go from 45-90. As long as your starting point is ALWAYS higher, you will continue to go a next leg up as long as the fundamentals' are there. Stop watching the media, and thinking the oil crisis was solved in the month of July when NOTHING positive happened in July, but ONLY positives happened in July for higher oil prices. We will say it again: THIS COUNTRY WILL GET BLIND SIDED BY 200 DOLLAR OIL!