It sounds like the start of a corny joke.
"Energy's bad ..."
"How bad is it?"
"It's so bad ..."
But this is no joke. Let me give you some possible punch lines, and therefore some trades, to look at and see if we can't catch a little magic in a bottle for a very short-term play.
"Energy has been so bad ..."
... that Anadarko (APC) recently traded under $60 a share, a drop of nearly $30 in less than two months. This fantastic E&P has been the worst performer in a basket of really horrible beta plays in energy. If this one continues to bounce from yesterday, it could take back $6 or $7 easily without breaking a sweat. Have a look at one lousy chart:
... that even some of the best coal companies, the one's you know aren't going to go broke no matter how long natural gas prices stay low, that deal in metallurgic, industrial coal are at levels that look like their demise is imminent. Is China really going to grow at 3% instead of 7%? Is the U.S. entirely swapping over to nat gas utilities and is the entire aluminum and copper forging industry going to stop in its tracks here as we sink into a repeat of the Great Depression? The chart of Alpha Natural Resources (ANR) is saying that, trading under $10 yesterday for the first time since, well, for the first time.
... that some natural gas E&P's have shed almost 30% of their market caps in the latest downturn, despite the fact that they are well run, have tremendous assets that are not leveraged out to the max, need not continually sell assets to finance new finds, have no strange JVs and companion deals with their CEO, are converting successfully to crude production and NGLs and, in short, are being painted with the same brush as bad boy of the sector Chesapeake Energy (CHK). Ladies and gentlemen, I give you the chart of Sandridge Energy (SD).
Energy has been so bad that I've begun buying some very short-term in-the-money calls in all of these names, looking for a very-short-term relief pop, which I think can move these stocks for a good 15% in only a few trading sessions.
Take no long view and take some quick profits, only invest a little premium and use the June expiration, which has five or six days to run. If these names follow through a bit, then that's all you'll need.
Then the joke will be on them.