During the last stock market top in 2007 and 2008, the price of natural gas completed a basing pattern (bottom) and broke out and had a massive rally. Will this happen again this time around?
Based on the stock market stage analysis, market sentiment, and the price action of natural gas, it appears the stock market is topping and natural gas is on the verge of a breakout and rally.
The price of natural gas moves in strange ways. I found that on when there is fear in the stock market and stocks are down along with almost every other asset class (this is rare), that natural gas is typically the only asset and/or commodity trading higher. I'm not 100% sure what to make of it, but I have seen this repeatedly over the years.
Weekly Chart of the S&P 500 and Natural Gas
Natural Gas Forms Bottoming Pattern and Basing Pattern
Earlier this week I recorded my conversation with HoweStreet talking about natural gas, gold and oil - LISTEN HERE
No matter if this correlation in stock price and natural gas exists or not, the fact of the matter is that stocks are showing signs of a significant top, while natural gas appears to be bottoming.
In the coming days several swing trade and long-term opportunities will present themselves. Stay tuned for which ETFs and/or stocks I will trade to profit from the pending moves.
This article is commentary by an independent contributor. Chris Vermeulen is full-time trader and research analyst for TheGoldAndOilGuy Newsletter.