I’m always looking for input from you, the “Good Readership”, to guide me on topics you’d like to see covered on this blog. I prefer not to cover individual stocks unless they are big movers like Valeant was last year – and widely held “significant” issue like Apple. I am very happy to address a sector, a commodity, a country index, a security type (such as preferred shares which I addressed a few months ago on a reader request) or an ETF that you follow which might have some appeal to the broad audience that reads this blog. Case in point – a reader recently asked me to cover my thoughts on Nat Gas from a technical perspective. His wish is my command.
Below is a chart of Nat Gas that I keep on my “Saved Charts” collection in my stockcharts.com file. I’d encourage readers to keep their old charts if only to be able to look back at your old notations and see how accurate your analysis has been. I’ve been doing this for a long, long time…and I can attest that my successful approach to trading has been a result of ongoing study and learning – from others AND my own past trading decisions. This is why you will often see the same charts – updated of course – on this blog. I follow my past work, updating new patterns, but also displaying my past trendline and formation observations. In this way, you can see both current and past observations—be they right or wrong. It’s a principal I’ve maintained on our ValueTrend website – we display and disclose our ongoing performance numbers – which hopefully continue outperforming the market, but at times, may sling some mud on our faces. But it’s all part of our commitment to full transparency.
Nat Gas looks to have formed a “Head & Shoulders Bottom” of late. It’s done this before, as you can see by my past notations of that same formation in 2012. A perfect H&S bottom will decline in volume as the formation occurs, and then will ramp up in volume when the breakout occurs. It’s ideal if you get a neckline test. It did test the neckline in 2012, and looks to be doing the same right now. Been there, done that – as they say.
According to the Thackray’s Guides, and EquityClock (chart above), Nat Gas has 2 seasonal periods to look for – I’ve marked them on the EquityClock chart. The first is March to June, followed by another period of strength from September to late December. In between those periods, the commodity can be a bit weak. It would seem that the seasonals are working quite well this year, having seen the rally occur precisely from March until June, followed by the pullback to the neckline – coincidentally occurring between June to recently. The exact same pattern and seasonal timing occurred in 2012 when it staged its last H&S bottom. Hey—this seasonal stuff really seems to work! If seasonals play out in conjunction with this chart formation, Nat Gas could be a “buy” candidate by the end of this month or very early September.
When you get a chance, perhaps you can comment on healthcare sector.
In particular these ETFs:
I personally hold HHL-UN because it has a higher yield and similar growth to the other two.
The volume is very light for all three and the bid/ask spread is okay.
I was able to purchase over 10,000 shares of HHL-UN several months ago, in single day across multiple accounts, so the market-maker seems to be providing decent liquidity.
Thanks for the input and idea Robert–I will put it on my list of ideas
We just sold XHC-T a week ago–some minor resistance on the chart at $42, along with a macro decision to sell more equity in light of seasonal potential for greater volatility on markets into late August/September. We saw a couple of the components of the ETF report delay in drugs passing through their various stages of acceptance, and earnings being a bit soft, so we decided to take profits and use the sale as one of our victims in raising cash.
Keith – thanks for sharing your past “notes” on natural gas and current thoughts. Love the article – very clear, data based and best of all, enables me to confidently act. I’ll be looking out for a buy opportunity soon. Do you have any tips as to how to recognize the low or when it has turned up? The neckline looks like about $2.50? So perhaps buying a bounce off that? Thanks again for sharing your wisdom!
Buy on a bounce!
Keith, appreciate your thorough topic explanations. Could you add to your TO DO blog list something I have never figured out or heard asked about.
On an inter-listed stock like say IMO, the US and the Cdn TSX chart can give totally different perspectives on the same stock. One might be above the 200 day and the other below, or point and figure buy on one and not on the other. How do you know which chart (USD or CAD) to use and what factors would be considered?
John in Wasaga Beach
John–if CDN a stock is cross-listed, it will reflect on the US side its value in CDN dollars. And visa-versa. So what you saw was currency value reflected in the share price–which may or may not work in your favor, depending on which way the CDN/USD spread went during your holding period.
NatGas getting close to breaking out as per your blog entry. Do you have any decent nat gas stocks to consider if one does not want to buy the commodity?
Thank you and keeping fingers crossed for Silver…
I dont tend to do individual recommendations on this blog–but lets just say that any stock with high leverage to gas–you cuold probably just buy a commodity etf like the Horizon one and do fine if the technicals go.