Sunday, April 25, 2010

I’m feeling Gassy

According to the bible on commodity seasonality – The 2010 Commodity Traders Almanac, natural gas has a tendency to bottom in July and then peak in December. If you have the publication they go into detail on page 147. This is the Forty-Third annual edition and their success is likely due to their large institutional following in the U.S.

Now again a word of caution on seasonal investing because nothing works all the time and the only “sure thing” is that annual seasonal publications will occur once a year and they will say the same thing as the year before. So in this case seasonality always works – otherwise any other seasonal call should be confirmed by technical analysis.

In the case of natural gas the technical picture supports the case for a new bull market. When we study a weekly chart of the natural gas the continuous contract NYMEX (lower plot) we can see the completion of a first up-leg advance from September 2009 low of $2.50 through to the January 2010 peak of $6. The subsequent correction took us back down to the $3.80 level in early April 2010. Our weekly down cycle in now bottoming at week-16 with the price posting at all-important higher low

Unfortunately if you owned the toxic Horizons BetaPro NYMEX Natural Gas Bull+ ETF (TSX-HNU) you would not feel too bullish on natural gas. Note the recent 52-week low on the HNU. There are much better ways to enjoy the new gas bull. Our Level I and Level II seminars cover all this material. The current Oakville dates are May 4 and May 6, 2010. To enrol visit www.gettingtechnical/seminars our use this link


Trading Student said...

Hey Bill, any thoughts on the Claymore Natural GAS ETF? It also seems to be displaying similar divergence to the actual commodity pattern as with HBP HNU. said...

Hello Student

The Claymore GAS is OK as long as the price of Nat Gas is on the move - but if we are early it is better to own the gassy producers like
Birchcliff Energy Ltd BIR
Crew Energy Inc. CR
EnCana orporation ECA
Fairborne Energy Ltd. FEL
NuVista Energy NVA
Progress Energy Res PRQ
Questerre Energy QEC-T
Rock Energy Inc RE-T
Storm Exploration Inc. SEO
Talisman Energy Inc. TLM
Twin Butte Energy TBE

Bill Carrigan