Natural gas spiked higher today while the broader market and most commodities went lower. The United States Natural Gas Fund, LP (NYSE:UNG) rose into the mid day session by 0.31 (+3.96%) to $8.13. This is a significant move because oil is trading lower on the day as well as the markets. The United States Oil Fund LP (NYSE:USO) is lower by 0.27 (-0.84%) to $34.37.
As natural gas diverges to the upside against oil, it is important to recognize this as a sign of significant strength. In addition, the chart now signals a breakout to the upside with further appreciation to come. It is also highly likely that the new energy bill will boost natural gas consumption by increasing natural gas vehicles and fuel systems. Based on its cheap price, this is most likely the place to be.
Natural gas stocks should be on watch in the coming weeks. Stocks like Chesapeake Energy Corporation (NYSE:CHK) and small caps like Cheniere Energy, Inc. (AMEX:LNG) and NGAS Resources, Inc. (NASDAQ:NGAS) are all trading in the lower ranges of their respective charts. I personally picked up some NGAS today based on the natural gas breakout and the fact that NGAS is trading at the dead lows of the chart. Risk to reward here seems extremely attractive. To get more information, analysis, guidance and education, join the Research Center.
Gareth Soloway
Chief Market Strategist
www.InTheMoneyStocks.com
