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Sunday, June 14, 2009

Go long Nat gas !!!

"United States Natural Gas (UNG). Bespoke recently reported that United States Natural Gas (UNG) has seen a 77% increase in trading activity over the last 50 trading days. Marc Courtenay identified that the price of oil is trading at 19x that of natural gas at $3.7 a British Thermal Unit whereas history pegs the ratio at 10x. In other words, oil could pull back to $60 per barrel, and natural gas would need to jump 60% to reach the historical average." - Gary Gordon

"There are striking similarities between the stock charts of the US ETF for natural gas (UNG) now and where the stock chart for the US ETF for oil (USO) was in December-February.
The two charts tell us that despite all the bearish fundamentals for natural gas in North America (and there are lots!), the time to buy UNG is very near. The chart for the Canadian natural gas ETFs (GAS-TSX, HNU-TSX) tells the same story. " -Keith Schaefer

If natural gas gets any cheaper, there will be supply problems because gas wells will be shut in. There is also the wildcard of weather related shut downs in the late summer (hurricanes) or increased demand if there is hot weather.

"natural gas typically has its best quarterly performance during the third quarter. While natural gas' best quarter happened to occur in the third quarter of 2005 (99%), Q3 is also positive more often than any other quarter (63% of the time). Finally, the median return of natural gas since 1990 is higher than any other quarter (10.4%), and is also over twice the return of the next nearest quarter (4.5% in Q2).- Bespoke Investment Group

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