CEA Monthly Issue – May 2015

Commodity: Natural Gas

I’ve had a change of heart…

As you may remember from our update earlier this week, I wasn’t at all bullish towards natural gas.  Despite a cold Eastern US winter, natural gas inventories are plentiful.  And that made the bullish case for the commodity rather unconvincing.

While the above is still true, my view on this market has changed.

Let me explain…

In case you’re unaware, natural gas recently touched 3-year lows at $2.50 mmBtu.  What’s more, the commodity is down 45% over the past 12 months and down 7% year-to-date.

Clearly, bears have had a hay day with this commodity.

But now their reign may come to an end…

You see, each time natural gas dropped to $2.50 or lower over the past six years, investors saw dramatic gains in the months following.

For example, the commodity tested $2.50 in mid-2009.  But by year-end, it was trading at $6- a 140% gain.

And as long-time energy investors know, natural gas fell to $2.00 in April 2012.  But by October of that same year, it was trading at $4 – a 100% gain.

Can the same thing happen this time around?

You bet!

You see, natural gas has just gotten too darn cheap.

And that means the risk/reward is now skewed greatly in favor of the bulls.  After all, the commodity can’t go to zero.

But that’s not all…

There’s a never-before seen change coming to the US natural gas market later this year.  It’s a change so disruptive that investors will have no choice but to factor it into the price of natural gas.  And that re-pricing could start happening sooner than many realize.

I’ll explain what this new catalyst is in our upcoming monthly update.

For now, just focus on entering the US Natural Gas Fund $UNG at any price under $14.00.  As you may be aware, $UNG is a great way to capitalize on swings in the natural gas market.

When natural gas rises, so will $UNG!

Technically Speaking:

As you can see, $UNG is still stuck in a decisive downtrend (red line).  But also notice how the commodity ETF is lifting nicely off the recent lows.  When $UNG breaks firmly above the down trend line, it can carry higher quickly.

 

WHAT TO DO NOW:

US Natural Gas Fund $UNG is trading at $13.46 

Buy $UNG up to $14.00 per share  

Our profit target is $18.00 or more 

Risk Control Price is $12.13 (or a 10% stop loss from your entry point)

 

Category: Commodity Trading