Here is some of what Don Dion blogged about on RealMoney this past week.
Picking a Natural-Gas Play
Posted 12/11/2009 1:52 p.m. EST The future for natural-gas prices remains bearish in my view, but there's no denying the fuel's recent rally, or the short-term investment opportunities for those of a more bullish mindset.
If natural-gas prices stay strong, the newer U.S. 12 Month Natural Gas Fund (UNL) is a better bet than the U.S. Natural Gas Fund (UNG). But if you want to hedge your bets, the First Trust ISE-Revere Natural Gas Fund (FCG), which has tracked oil equipment and exploration ETFs more closely than the price of natural gas, would likely benefit if both oil and natural-gas prices increase.
In the past month, while the U.S. Oil Fund (USO) fell 11.6%, UNG gained 5.6%. The divergence was most dramatic today with crude prices briefly dipping below $70 per barrel, as natural-gas prices jumped 7%. UNG previously outperformed USO for brief periods this year, but the general trend has been one of consistent underperformance, as UNG fell to one new low another.The recent rise in natural-gas prices is largely thanks to early winter weather in parts of the U.S., which caused inventory to dip for the first time in nine months. While some may see this as strong evidence of a resurgence for natural gas and UNG, the supply/demand imbalance continues to make me cautious. In any case, UNL has outperformed UNG throughout the rally and will likely continue to do so if the jump continues. Where winter heating costs are concerned, oil prices may benefit as much as natural gas, a scenario that would make FCG the best play. I have often promoted FCG as an alternative to the damaged UNG, but rather than following the recent natural-gas rally, FCG appears to be mimicking the performance of oil and oil explorer funds, with UNG price movements nudging it up or down within that group. In this scenario, FCG will outperform the other instruments it has been trending with, including the iShares Dow Jones U.S. Oil Equipment Fund (IEZ), due to its stronger exposure to natural gas. > >Bull or Bear? Vote in Our Poll
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass + 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV