Customer Service 1 (888) 261-2693
Advanced Search

Take Profits on Natural Gas

By Jeff Clark
Thursday, May 21, 2015

The price of natural gas has spiked 15% higher over the past month.
 
Ultimately, natural gas prices are likely to trend even higher over the next few months. But in the short term, the commodity is due for a breather.
 
So if you took our advice and bought natural gas in April, it's time to take your gains off the table and wait for another pullback to get back into the trade...
 
Take a look at this updated chart of natural gas...
 
 
Last month, I suggested an inverse head-and-shoulders pattern was developing on the chart. This is a bullish pattern that signals the end of a downtrend and the beginning of an uptrend. The left shoulder and the head of the pattern were already in place. All that was left to complete the pattern was a rally back up to the neckline followed by a drop back down to a higher low – which would form the right shoulder.
 
Now, we've gotten the rally up to the neckline. The price of natural gas is bumping into resistance at about $3 per thousand cubic feet (Mcf).
 
It's also modestly overbought on the moving average convergence divergence (MACD) momentum indicator and the relative strength index (RSI). So this is a reasonable spot to look for a short-term top in the price of natural gas.
 
Traders should now look for a move back down toward the $2.60 price level. That's above the $2.50 low in April, and it's symmetrical with the low in February. That sort of move would work off the current overbought conditions, form the right shoulder of this pattern, and give traders an excellent chance to re-enter this trade.
 
It would also set the stage for an even stronger rally toward the $3.30 price target.
 
But for now, a 15% gain in one month on a volatile commodity is a solid trade. It's time to be smart and take some money off the table.
 
Best regards and good trading,
 
Jeff Clark




Further Reading:

Brian Weepie says there's another commodity you should consider betting on this year. In fact, one of the world's largest commodity firms recently bought a record 1.9 million metric tons of it. Find out why this is such a big deal right here.
 
A lot of investors who deal in the natural resource sector are constant losers. "But if you know what you're doing, you can make serious gains," Brian says. "And setting yourself up to profit starts with one simple rule." Learn more here: A Simple Rule for Resource Investing.

Recent Articles
Market Notes
Another positive sign for housing... flooring company Mohawk Industries touches an all-time high.
 
America's small banks are booming... regional-bank fund KBE hits a fresh 52-week high.
 
Shares of retail giant Wal-Mart sink 12% in 2015.
 
Blue-chip drugmakers Abbott Laboratories and Eli Lilly rise 25% over the past year.
From The Crux
Market Watch
Symbol Price
Change
52-Wk
S&P 500 2127.92 +0.0% +13.6%
Oil (USO) 19.74 +0.6% -47.4%
Gold (GLD) 116.03 +0.1% -7.0%
Silver (SLV) 16.43 +0.3% -11.9%
U.S. Dollar 95.57 +0.3% +19.4%
Euro 1.11 -0.4% -19.0%
Volatility (^VIX) 12.90 +0.4% -0.5%
Gold Stocks (^HUI) 173.97 +0.5% -19.9%
10-Year Yield 2.26 -0.1% -10.0%

World ETFs
Symbol Price
Change
52-Wk
China (FXI) 49.89 -1.3% +44.2%
Japan (EWJ) 13.24 -0.2% +21.5%
India (IFN) 26.85 +0.1% +19.7%
USA (SPY) 213.09 +0.0% +15.8%
Taiwan (EWT) 16.44 -1.1% +13.3%
Israel (ISL) 19.00 +1.9% +12.1%
S. Africa (EZA) 69.50 +0.1% +2.8%
Singapore (EWS) 13.39 -0.5% +0.9%
Canada (EWC) 28.56 +0.3% -3.8%
S. Korea (EWY) 59.91 +0.6% -6.2%
Russia (TRF) 11.44 -0.4% -14.1%
Lat.America (ILF) 31.75 -0.4% -15.4%

Sector ETFs
Symbol Price
Change
52-Wk
Biotech (PBE) 57.12 -0.5% +51.1%
Semis (PSI) 27.79 +0.9% +38.4%
Health Care (IYH) 159.52 +0.3% +32.1%
Big Tech (QQQ) 109.97 +0.0% +26.4%
Software (PSJ) 42.81 -0.4% +25.3%
Consumer Svcs (IYC) 145.00 -0.3% +23.8%
Retail (PMR) 39.31 -0.4% +21.3%
Financials (IYF) 91.84 -0.1% +17.1%
Defense (PPA) 36.99 +0.4% +18.1%
Media (PBS) 27.15 +0.4% +17.1%
Construction (PKB) 24.23 +0.3% +14.6%
Insurance (IAK) 50.64 +0.1% +12.1%
Real Estate (IYR) 76.61 +0.1% +12.0%
Utilities (XLU) 44.74 +0.3% +11.6%
Transportation (IYT) 153.81 -1.2% +10.5%
Industrials (IYJ) 110.23 +0.0% +11.7%
Telecom (IYZ) 29.98 +0.4% +4.7%
Basic Mat (IYM) 84.94 -0.1% +2.6%
Water (PHO) 26.14 +0.0% +2.8%
Alt. Energy (PBW) 5.71 +0.5% -1.4%