Markets reverse after Libya worries finally unsettle investors

The FTSE 100 moved into negative territory late on in the day finishing down 16 at 5,974 as Wall Street reversed into the red. Worries that the unrest in Libya could spread to other oil producing states worried investors. If one of the Middle Eastern producers had an interruption in supply we could see oil at over $200 a barrel, with a huge negative impact on global economic growth similar to the oil shock of the 1970's following the Arab-Israeli war.

The Contrarian Investor Uk portfolio had a good day with some good timing of trades. I ditched some Rockhopper positions early on whilst still up (finished down 5%) to increase my holding in Weatherly and Solomon Gold. Both were down in the morning but SOLG finished up 7.5% and WTI finished flat. At 12p Weatherly was a great top up opportunity despite the drop in the copper price today. Good to see Xcite staying in the blue, though off its best for the day.

On another note, Sareum Holdings finished down 13% after the 30%+ rise first thing (see my post earlier in the day). MeDaVinci changed its name to Orogen gold today and fell 8% to 0.87p as the new shares were issued to complete the purchase of its Serbian gold prospect.

Markets strong despite Libya

The FTSE 100 is having a good day, up 42 to 6,033. The Dow Jones industrials are up 57 to 12,223.

Citigroup today increased its 2011 forecast for US light crude to $105 per barrel from $90 and their 2012 forecast is for at least $100 a barrel. Libya has lost about 1 million barrels of production since the civil war broke out. Tanker rates have surged 18 fold since the beginning of March as oil refiners try to stock up on crude supplies in anticipation of further issues in North Africa and the Middle East.

Unfortunately we are as addicted to oil as we ever were, particularly in the U.S. where fuel efficiency is still not on the agenda of many American motorists. $100 a barrel oil may make consumers think differently about the way they use oil, and in the case of the USA its about time. With petrol now at £6 a gallon in the UK, we are already paying the price of rising oil but also bloated taxes on the fuel.

Classic Pump and Dump on Sareum Holdings

Cancer drug development company, Sareum holdings (SAR) soared to 3.25p first thing this morning on hype about its new cancer development drug. The shares have risen almost three fold in the last few few days on a stampede into the shares. But unfortunately beyond the hype a few pieces of important information seem to have been.forgotten. The chk1 inhibitor for bowel cancer is in a preclinical phase and although at this very early stage, results have been.encouraging, ultimately 90% of new drugs don't make it to market because of safety or efficacy issues.

Also it will take 5 years at least for the drug to hit the market as they are years away from a regulatory submission. They have around a £1 million left in the bank, so a placing is likely as big drug companies will not pay a big upfront payment to Sareum until certain milestones have been met. Also the company will want to expoit its RNS to the full, and fill its coffers whilst it can. I can tell you that if a placing happens it won't be at 3p.

I see that sense has prevailed and the shares are now down 10%, after being up over 30% earlier. The smart money bolted when it hit 3p, and the poor private investors who believed the hype can now get 2.1p. A great "pump and dump" if i ever saw one! I hope too many new investors in AIM stocks haven't lost too much! Be careful out there, its a jungle!!

Plenty of action today for porfolio stocks

Xcite Energy is moving up nicely today to 350p to buy. What a bargain XEL was at 300p early last week. With reserves upgrade due in the next 2-3 weeks I think there will continue to be plenty of upside here.

Amazing that Weatherly Int. is down again today by 3%. Have topped up yet again and now holding a little too many for comfort. But when stock is drifting down like this its a good time to buy. Calling the bottom is an impossible task and 12p feels pretty comfortable.  Same goes for Solomon Gold which is down to 27P to buy. When everyone else loses interest, this is the time to buy, not on the spikes when the momentum investors are back.