Monday, June 7, 2010

I’m Feeling Gassy

Last May 26, 2010 I chose to put aside from my personal negative bias and bought Suncor Energy at the close at $30.69 just for a trade. Remember I never liked Suncor because it has been a persistent under performer from September 2009 and I am not a fan of the tar sands producers because their business models are cluttered with cost problems and environmental issues. The remedy for the dirty tar sands is an alternate energy source such as natural gas, solar sells, hydrogen fuel cells, geothermal power turbines, and nuclear. We could also try to get people out of their cars and build more transit infrastructure.

The problem with all these alternate energy solutions is that no investor has made a dime on this stuff. Now if you believe that for every bear market there is a bull somewhere else, or for every capital event there is an opposite capital event somewhere else we can find a potential alternate energy winner. One of the best ways to identify a bullish group of stocks or a sector is to see how they behave during a nasty correction such as the one now underway in the broader global stock indices. Our chart is clearly displaying a bullish advance in a natural gas ETF (GAS) relative to the recent downturn in the S&P/TSX60 large cap index. We need to do some homework on the gassy space and examine the gassy producers to see if they are “confirming” the move of the GAS


chrispycrunch said...

Hi Bill,
To what degree to you weigh the following for buying energy?
1) Drop in copper, and metals in general (eg: FCX) is 20% or so - sentiment is clearly negative
2) BP and the oil spill
3) Euro and the negative sentiment there? said...

Hi chrispy

I veiw crude as economy sensitive and so we need the Euro crisis to be resolved - I think nat gas will be the big surprise as we run into opposition to off-shore drilling and shale fracking

Getting Technical