Autumn's Contrarian Ideas: A Review

NEW YORK (TheStreet -- The new contrarian ideas portfolio for the autumn is off to a mixed start, with gains in shorting both stocks and oil and losses in corporate bonds and natural gas. Here is a position-by-position review.

Idea No. 1 -- Buy Natural Gas

The United States Natural Gas Fund(UNG) has lost 3.1% in a week, the worst performance in the portfolio. See the following graph:

United States Natural Gas Fund Source: Stockcharts.com

Thursday was a gap-down day for UNG (noted on chart), but Friday saw an up day on increased volume. This is a positive sign (strong volume up day immediately following a gap down day), but we have to note that, two times recently, stronger volume up days did not presage good follow-through to the upside.

If there is a rally above the 50-day moving average, there is tremendous upside. Seasonality favors natural gas and the last time oil was in the current price range (in 2007), UNG was around 40. If we are stopped out of this position, we will immediately put in a new limit buy order for $9.05.

We are also following First Trust ISE-Revere Natural Gas(FCG), but are not including it in the tracking portfolio results.

Idea No. 2 -- Buy North American Energy Production

With the pullback in oil and natural gas over the past week this position, Enerplus Resources Fund(ERF), has lost 0.6%. The price is currently 5.3% above the trailing 10% stop-loss order.