The 12 month ng strip has dropped $1.30 since the beginning of the month. If an El Nino of this magnitude was fully anticipated the futures and the ng related equities would not have moved in this manner.
The macro trends are simple at the extremes. If NG was $3, does anyone doubt the values of gassers would fall from current levels, ceteris paribus? And, if NG was $13 or more, does anyone doubt that NG-related stocks would rise?
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With warm weather prospects and with storage at record levels, what is the compelling case to be long? At some point/date, the macro forces of supply and demand have to be reflected in stock prices. No, not every day, or every week, but in the current environment, the risk of a contrary position is extreme. Just one example: what has happened to the price of DVN since its long-term prospects have improved from new Gulf discoveries?
Markets are imperfect in the ST, but in the long-term, I think contrarians will get crushed. Many resident bulls have experienced this painful lesson.
Que..... I agree with your perspective. |
