<To me, being a bear on natural gas right now is riskier than being a bull on Internet stocks was nine months ago. >
... Tomasso; in all due respect.
I think you got the concept wrong.
Being bullish on Nat Gas "stocks" right here with the coldest winter in 20 years and alltime highs in natrual gas - the commodity; is like being bullish on Internet Stocks at Nasdq 5000.
Being short the "commodity" for the next 2; maybe 3 months may be a bit insane; but short April-August futures with decade high Nat Gas drilling/rig utilization underway ? - maybe a hell of a bet imho...
Sell the euphoric, once in 20 year, alltime highs - you buy the once in 15 year lows... or, as Baron de Rothschild said:
Sell the Trumpets, buy the cannons...
right Bullsky (VBG)?
This is this cycles profit taking - selling & exit "peak" for Nat Gas stocks on the horizon; it's when, not if.
I can understand someone not selling XTO,NBL, BR, APC, APA here - most are still substantially off their former highs; allthough, XTO is near its high having bounced of late.
There "should/could" be some upside if the "commodity" Nat Gas goes into another move up with sustained cold weather. But; it's when, not if - to take profits & exit these stocks before the mass exodus begins sometime before the end of Winter/ Dec to March.
It's only a question as to if January, or February brings further cold weather pressure to Nat Gas - the commodity; or if we'd see a warm January, or Feb; whereby the commodity price would over-react to the downside.
The other forgotten factor; is that especially in the shoulder season - even Nat Gas pureplay's retrace with moves in the Crude - commodity market. Even an onshore Nat Gas domestic pureplay like HSE; gets sold off during crude oil price contractions - right, or wrong fundamentally; they do.
It's merely a very short term weather bet here; most Nat Gas stocks will not hit thier former highs of Aug-Sept; unless we see a Noreaster spike NG to another level and the "stocks" react to the commodity - if they do; it will be the "alltime" shorting opp and as I've said before; if you'd paid your dues in the Oilpatch on a full time basis; this sector - BEING CYCLICAL ! - owe's you as much profit on the downside trading/selling short - as it does on the upside going long.
Everyone holding E&P's here is going to have to beat the Institutional holders out the door - sometime this Winter.
To win this play; you have to bet right on weather & also beat the Institutions out the door during the next 3 mos.
Shame, shame, shame & pity on the "Oilpatch" speciality invetor here; who will not buy puts, or short sell this sector...
That is the essence of cyclicals - you make money in BOTH up & down markets - as you should if you follow it daily.
The problem is that 95% of individual investors can not emotionally separate themselves from their stocks & view short selling, or buying puts as some sort of blasphemous act...
My two dream trades in this entire market are both short:
1. a spike in the BTK back to 800+
2. A really historic Blizzard & Arctic Temps blanketing the entire nation in late February/early March (the later in Winter - the better) - and have the Nat Gas E&P's stocks fly to new highs - a short selling; sitting duck - period.
I am willing to go short Nat Gas pureplays with as much as 50% of my portfolio - should we see a speculative breakout in the next 2-3 mos - and I will make 35-50% within 45-90 days. - just a Sept '99 Deja Vu all over again trade.
In fact; I'll buy puts & leverage the downside...
These are cyclicals; not growth stocks people and Nat Gas is seeing a once in a generation convergence of positive events - that means you must beat the crowd to the exit & there's going to be a whole lotta cash made on the downside to that exit as well... when; not if.
... and I'm waiting for it. |
