Opinions
Jon Vialoux
HBP NYMEX Nat'l Gas Bull+
HNU-T
COMMENT
Sep 29, 2017
$5.790
Stock price when the opinion was issued
E.T.F.'s
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DON'T BUY
Over long periods of gas, there will be a natural decay in net asset value. Short term trading could pay off. Buy high and sell low. Natural gases are doing well right now, but he would prefer to play it through ETFs and equity exposure. Natural gas is a relative winner in the next few years. There has been significant under investments.
E.T.F.'s
PARTIAL BUY
Leverage play for natural gas. Clearly getting a breakout in the short term. Thinks oil is capped out and natural gas should trade relative to oil. Can see front month natural gas contracts going for $5. Forward pricing looks like there is room into next year to move further up. An okay way to do it if you can handle leverage. Not for a long term buy and hold.
E.T.F.'s
DON'T BUY
Double exposure to the natural gas market. Canadian and US stocks, in general, have a volatility of about 15%. The volatility of nat gas is in the range of 80%. So this one is a wild monster to deal with.
He's actually a bit bearish on energy because of the stated intention of the US government to pump oil and nat gas to lubricate the economy and economic growth. More production will hamper price increases. Secular pricing will be lower, spikes will only be cyclical.
The other side is that we have lots of AI power demand. Longer term, we could maybe see so much demand that prices get up off the floor.
E.T.F.'s
The problem with playing these leveraged products is that it is basically a gamble. You are anticipating a short-term move, and in terms of the double leveraged Bull, you are hoping that is going to be positive. This is really a gambling tool, and not something he would like to play. Natural gas has been struggling at its 200-day moving average and is starting to curl lower. The builds in inventory levels over recent weeks have been higher than average. Going forward, we are looking at moderate temperatures in the US, so it doesn’t present that bullish backdrop for a near term rise.