Are Natural Gas ETFs A Buy?

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Commodity Trading Research
Are Natural Gas ETFs A Buy?
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• Hi, My name is Justin and Im with Commodity
  Trading Research, today were reviewing our
  recently published article

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• Are Natural Gas ETFs A Buy?

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• The three-month downturn is natural gas has been
  quite remarkable. Fact is, the gaseous commodity
  has plunged just over 17 since mid-August.
• Take a look

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• Clearly, natural gas bears have ruled the roost
  the past few months. But whats really amazing is
  that this downturn has come in whats typically a
  strong time of year for the commodity

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• As I mentioned in early September, a 20-year
  seasonality study reveals natural gastends to
  rally this time of year as investors price in the
  forthcoming winter heating season.

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• But theres a problem

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• Old Man winter is nowhere to be found.
• Key heating regions in the Eastern and Central US
  have been enveloped in above average temperatures
  the past month.

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• And judging by the current National Ocean and
  Atmospheric Administrations (NOAA) 8-14 day
  outlook, theres more unusual warmth to come

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• As you can see, everything east of the Rocky
  Mountains will likely see at least another 10
  days of above average temperatures.

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• Of course, warmer weather keeps heating demand
  subdued, which in turn keeps natural gas demand
  lower. Weak demand mixed with high inventories
  has natural gas bulls grazing in the back pasture.

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• Speaking of inventories

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• Last weeks EIA inventory report revealed there
  was 3,929 bcf of working natural gas in storage
  for the week of October 30th. Thats 371 bcf
  (10.4) higher than last year at this time and
  147 bcf (3.9) above the 5-year average.

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• Clearly, theres no shortage of natural gas in
  storage right now. As a result, even if the
  upcoming winter is harsh (like the last two)the
  coldalone wont likely be enough to have an
  extended bullish impact on prices.

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• However,theres a relatively simple factorthat
  may bring bulls back into the picture soon

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• With the commodity trading a stones throw away
  from the 2012 lows at 2 mmBtu bears are running
  out of room for additional downside profits.

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• After all, a break below long-term technical
  support (green line) without a short covering
  rally or two is highly unlikely.

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• Bottom line
• Even though fundamentals are clearly bearish for
  natural gas at the moment, the long term oversold
  nature of this market may give quick traders an
  opportunity for profits in coming weeks.

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• One of the best ways to capture outsized gains is
  through leveraged natural gas ETFs.

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• But lets be clear
• Unless natural gas production slows meaningfully
  this winter (which is a very distinct
  possibility) any rally will likely be short-term
  in nature.

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• As a result, only quick traders with excellent
  discipline should focus on the leveraged ETFs
  mentioned in the link above.

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