Customer Service 1 (888) 261-2693
Advanced Search

Where Natural Gas Stocks Go From Here

By Jeff Clark
Thursday, March 29, 2007

While the market has done nothing but chop back and forth over the past couple of weeks, natural gas stocks have been on a tear.
 
Many of the stocks in the sector are up 10%-15% over just the past few trading sessions. But now it may be time for a break.
 
Let me explain...
 
Natural resource stock prices tend to lead the price of the underlying resource. In other words, gas stocks rally first, and then gas goes up... gold stocks rally first, and then gold goes up, and so on.
 
Last week, I wrote about the breakout in natural gas stocks. So it's really no surprise that natural gas broke to the upside yesterday...
 
 
 
This is a bullish breakout of a five-month consolidating-triangle pattern, and it signals higher prices for natural gas over the next few months. But we'll probably see a few days of lower prices in the stocks themselves.
 
Natural gas stocks were weak yesterday. That might be the result of an overall weak stock market, or maybe the stocks are just consolidating their recent gains. Either way, the stocks' less than stellar performance in the face of a breakout in natural gas signals the start of a brief correction period.
 
In the S&A Short Report, we took advantage of this yesterday by locking in a 50% gain on calls we purchased on a large natural gas producer four weeks ago. We're still sitting on gains of over 40% on a three-week-old position. And we're up 35% on the calls we recommended this past Monday...
 
And there are much bigger gains ahead.
 
I think any weakness in the sector over the next few days is a buying opportunity. The sector is cheap. It's unloved. And, when the stocks start moving again, underinvested institutions and hedge funds are going to pile on like five-year-olds on a busted piñata.
 
Be sure you're in position before that happens... the opportunity here is too good to pass up.
 
If the sector behaves like I expect it to over the next few days, then I'll have a couple more recommendations for subscribers. 
 
Best regards and good trading,
 
Jeff Clark




Recent Articles
Market Notes
Utilities Consolidated Edison, Mirant, Energen, and Scottish Power hit new highs along with Vanguard Utilities ETF.
 
Oil at 2007 high drives further strength in oil services... National Oilwell Varco, Dresser-Rand, Dawson Geophysical, PowerShares Energy & Exploration at new highs.
 
Homebuilders Beazer Homes and Centex hit new lows.
 
$65 billion biotech giant Amgen continues to slide… down 26% in the last two months.
Market Watch
Symbol Price
Change
52-Wk
S&P 500 1221.53 +1.3% +10.1%
Oil 37.77 +1.5% -2.8%
Gold 135.20 -0.1% +13.4%
Silver 27.93 +0.4% +47.9%
US-Dollar 80.67 -0.8% +8.1%
Euro 1.32 +0.6% -12.1%
Volatility 19.39 -9.2% -8.2%
Gold Stocks 564.53 +1.3% +10.6%
10-Year Yield 3.00 +1.4% -9.6%

World ETFs
Symbol Price
Change
52-Wk
USA 122.56 +1.3% +10.2%
Canada 30.44 +1.3% +13.8%
Russia 21.63 +2.3% +16.7%
India 37.73 +1.9% +20.0%
Israel 16.47 +0.9% +9.7%
Japan 10.58 +1.0% +7.4%
Singapore 13.88 +1.0% +19.2%
Taiwan 14.72 +1.6% +17.8%
S. Korea 56.56 +1.7% +22.8%
S. Africa 70.85 +3.9% +22.9%
China 45.06 +1.4% +0.1%
Lat.America 52.82 +1.4% +6.7%

Sector ETFs
Symbol Price
Change
52-Wk
Oil Service 136.18 +1.5% +14.8%
Big Pharma 64.13 +0.6% -3.3%
Internet 72.13 +0.7% +22.3%
Semis 16.03 +2.1% +28.9%
Utilities 31.21 +0.3% +1.6%
Defense 18.51 +1.3% +10.1%
Nanotech 9.99 +1.3% +0.0%
Alt. Energy 9.95 +1.4% -4.4%
Water 18.31 +1.1% +12.2%
Insurance 16.07 +1.2% +18.3%
Biotech 20.58 +1.1% +27.1%
Retail 19.65 +0.1% +28.4%
Software 24.59 +0.9% +24.1%
Big Tech 53.73 +1.0% +21.9%
Construction 12.99 +2.1% +13.3%
Media 13.57 +1.1% +25.0%
Consumer Svcs 67.26 +0.8% +23.3%
Financials 54.87 +2.4% +5.2%
Health Care 64.22 +0.7% +1.3%
Industrials 63.25 +1.6% +19.7%
Basic Mat 73.57 +1.6% +21.6%
Real Estate 55.24 +1.4% +23.8%
Transportation 91.17 +1.4% +25.6%
Telecom 22.48 +1.1% +17.1%