Nat Gas Dip Was Profit-Taking, Nothing More

Why did natural gas go down last week? What was that? Inventories were down. The commodity price was up. The fuel itself is green. It is better than ethanol and it is being used to fuel an increasing numbers of cars and trucks.

The whole move down had to have been triggered by something, right? Yeah, how about the fact that the stocks were up a lot and were due for some profit-taking.

Recall that the real "reason" they went down is that the dollar "got strong," and that was supposed to trigger commodity deflation; natural gas is a commodity and is therefore going to go down. (Barron's made this very case this weekend, oblivious to the facts, but loving the theory.)

This kind of thinking is just so stupid that it shows you can get chance after chance after chance to own the fuel that can take care of the nation if we just let it. Of course, the stocks began to come back later in the week as threats of supply cut-offs of crude -- they came true this weekend -- made natural gas declines virtually impossible, despite the "sense" that it peaked. So the money has came back and I believe will continue to come back.

Now, to recap, the quarters that were the best, besides Southwestern (SWN - commentary - Cramer's Take) on Friday, were Apache (APA - commentary - Cramer's Take) and XTO (XTO - commentary - Cramer's Take). Chesapeake's (CHK - commentary - Cramer's Take) cheap. I like Andarko (APC - commentary - Cramer's Take), too. Questar (STR - commentary - Cramer's Take) and Ultra (UPL - commentary - Cramer's Take) should not be overlooked, even though they were on fire Friday. Don't forget that Nabors (NBR - commentary - Cramer's Take) is the best drilling play for nat gas, too.

Can this rally continue? Why not? We have more natural gas, it can't be imported cheaply, the transportation of it is improving and the stuff's widely abundant from South Dakota to Pennsylvania (Marcellus Shale).

So, the "strong dollar/sell nat gas" trade is over.

Not too late to start buying again.

Random musings: Buffett's supposed to buy cheap. Wrigley's (WWY - commentary - Cramer's Take) is perhaps the most expensive packaged-goods company trading. No matter. I bet we hear how cheap it is all day.

At the time of publication, Cramer was long XTO.

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