U.S. Natural Gas Fund E.T.F. (UNG-N)

Natural Gas. FCG is a way to play the concentrated natural gas. Would stay away from playing the commodity futures part such as with UNG. This is in a challenging market. If you are bullish on the energy outlook, would play it with FCG.

The spot natural gas market in the US has a seasonal peak period of mid-March to mid-June for cooling needs and September into December for heating needs. He does own some natural gas exposure in another ETF, but is looking to take profit sometime in June. He is more excited about buying in September.

This has a history of bottoming right around the end of August, and then moving higher through until the 2^nd week in December. Natural gas prices have been bottoming during the last few weeks. Very briefly, a few days ago, this moved above its trading range. These normally go significantly higher, usually around the middle of December. You have to be aware that there is a contango involved in this particular product. His preference is to not to play natural gas directly, but to do it with equity securities.

(A Top Pick Oct 14/16. Down 19.51%.) (All these picks started off with positive seasonality between now and the end of the year. On the technicals, at the very least, you want the security trading in an upward trend and outperforming the market.) Technicals had very quickly deteriorated and it started to underperform the market, developed a downward trend and it was Stopped out. The warm weather is what happened. The period of seasonal strength ends in the 2^nd week of December.

The chart shows a nice little break-out recently, and the trend is clearly outperforming the market. Seasonally, natural gas moves higher from September right through until the beginning of December. Also, weather forecasters are talking about an El Niña, which means a colder than average winter. It is amazing how often natural gas peaks in the 2^nd week of December.

Nat Gas. Futures contracts. Are trading down short term and not so much further out because it is a short term supply issue. When LNG distribution starts, that is a game changer. He owns the companies, not the ETF. There is a problem with them having to rebalance.

Feels we are still a little bit early on the natural gas story. The good news is that there is a floor on natural gas now. The switching from coal to natural gas looked like it was moving in an interesting direction and then unfortunately it turned back down.