See our blog of Dec. 8th. This is a nice start and still has a lot of potential. With natural gas at US $ 1.68 you could not have gone much lower before you might as well start flaring the stuff again.
HNU
Natgas, HNU
Natgas futures are showing a potentially serious buying opportunity. Given all the overlap, at various degrees, and the fact that this is in all likelihood a 5th wave, the most probable pattern is that of an expanding diagonal. If so, then a rather violent retracement, most often right to the start, should follow. This would be in synch with our view that oil has or will bottom soon and will rebound for a few months.
The best way to play this is by purchasing the HNU, the Horizons Beta Pro 2X Natgas Bull ETF. We have played this game very successfully before and believe this is the time to do it again. See previous blogs for HNU. To put the present value in a historic perspective below are two longer term charts for the futures and HNU;
Clearly we are closer to the bottoms than the tops, all we need now is a little chill which we are actually getting as we speak.
Natgas, HNU update
See our post of April 18, 2012, under Natgas, HNU and Gas. The last one we could not find anymore, it is the Claymore ETF but the two others will suffice. Here are today’s charts;
There may well be a lot more to go, but we do not like the speed at which things have gone up recently and also we do not like the DJ Titans Gas 30 index. So we recommend stepping aside. On both you have easily doubled your money in just under two years, which, using the rule of 72 amounts to a return of 36%, compounded per annum. Note that the RSI and the MACD are not confirming the higher prices. Also, on the futures, there is a fairly large premium on the front (spot) contracts but that quickly turns around when you go out further in time (backwardation) all of which points to lower, not higher prices in the future.
HNU update, GAS update
Fortunately we recommended selling at $14+, see previous blog. If the a-b-c is correct, a new low should be forthcoming, after a 5-wave move. There is already one there but not yet complete. It is a buy soon and certainly under $8.
GAS, the other ETF is just a little clearer;
The counts are not clear on either, but in the case of GAS the latest drop down looks a lot more like an a-b-c, which is corrective, perhaps a wave 2. It should then not make a new low!