My Continental Resources CLR Stock Buy / Trade

On July 7, 2009, I made my first long term stock buy since December 2008 in which I bought shares of Continental Resources Inc. (CLR) at $22.61. In November 2008, I started buying shares of Mercadolibre, Inc. (MELI) below $10 and let most of them go between $12-$13 one month later. My plan was to " flip " my MELI shares by selling them at a higher price and buy them back lower. I never got the chance and you can now see where shares of MELI are to this day. above $23. Oh well, I will take a 25% one month gain in a grizzly bear market any day!!

When I accumulate a long position, I don't buy the stock all at once and will often try to trade the shares when the opportunity is right. Today I traded shares of CLR at the open, selling at $24.50, buying back at $23.80. I still only have half the stock position I want to be at.

Why did I buy Continental Resources Inc. (CLR)?? Well first off, I must say that I have been watching CLR for awhile and given the economic crisis in 2008, I really didn't feel good about the first quarter of 2009. We ended up hitting a bottom in March but given the gut busting downward spiral the markets were in, who knew when we would hit bottom?

A week ago, Oil prices made a short term top around $73 and are now back to $60. Shares of CLR topped out above $34 on June 10, 2009. Since then, there has been an $11 price drop for no reason at all. I made a buy on July 7 at $22.61 with the low being $22.33.

I bought CLR because they are the largest operator in the Bakken Shale which is a huge oil formation located in Montana and North Dakota. The Bakken Formation is the largest oil field in the United States. Given the recent news about China inking deals with Brazil, Russia, and other countries for Oil, one day these assets in the United States could end up being more valuable then the price of oil ( which will be much higher ) itself.

Sanish / Three Forks Oil Zone - The three forks zone is located in the middle bakken formation and many of the companies drilling in the Bakken are find large amounts of Oil in this zone. Some of the best oil wells coming out of the Bakken Shale are from this area. What CLR and a lot of companies aren't sure about is if this is a separate zone or part of the bakken formation itself. If it turns out to be a whole new oil field, Continental's reserves could increase by 40-60%.

Government lack of Action: What is it going to take for the United States to get away from our dependence on foreign oil? Oil prices went to $140 and everyone was trying to figure out ways get off of our Oil Addiction. Government talked about offshore drilling, lifting the ban on Anwar and the Green River Formation in which the Government restricts drilling. Oil prices then went to $40 ( the best time to take action ) and all you heard was silence on this issue. The fact of the matter is, we are never going to get off of oil, at least not anytime soon. Oil prices went from $35 to $70 on a hint of recovery....can you imagine what happens when the demand for oil actually comes back?

Jim Cramer likes CLR - Jim Cramer recently recommend Continental Resources to his viewers. I usually only agree with Jim about 20% of the time because his show is strictly for entertainment purposes only but he does bring up some good points about CLR in this video. Jim Cramer has had some REALLY bad calls but also some great calls. I think CLR will be one of his great calls.

Bottom Line - The prospects for Oil look bright, CLR is undervalued and sitting on nice US Oil assets as well as Natural Gas assets.

I will be buying anything under $20 from here on out but will be trading some of the shares every few days for a chance to sell high and buy back lower.

Continental Resources ( CLR ) is a Strong Buy below $25

For the latest updates on the stock market, visit, http://daytradingstockblog.blogspot.com/ or Subscribe for Free