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Vet67to82 (< 20)

Nat Gas 101

Recs

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March 24, 2010 – Comments (22) | RELATED TICKERS: CHK , UNG , COG

Nat Gas, and associated companies like Chesapeake Energy (CHK), is going to get better. 

Our Prez and Congress have their priorities all wrong.  Now that the healthcare debacle, is temporarily off  to the side ( I think the courts will make them FIX parts of it ... ) Congress and the Prez need to get their priorities straight ...   The USA has a HUGE trade deficit, yes,  much of it with CHINA and its' manipulated currency, but also with imported crude. 

To offset that huge trade deficit , the USA can now focus on its abundant supplies of Nat Gas, and Coalbed Methane,  to power MORE trucks, cars, busses, etc ...   Doing a lot more NOW with Nat Gas will help with JOBS, the TRADE DEFICIT, GLOBAL WARMING (Nat gas is a cleaner fuel than crude or coal)  and even our NATIONAL DEBT.

Nat gas is a cleaner fuel than crude, yes it is ... and not just in, and for, the environment. 

 Take three identical vehicles, run one on gasoline, the second on diesel, and the third on nat gas.  After 100,000 miles .... disassemble the engines ,,, and look at the CRUD, except the nat gas engine is pretty clean ... wow !! Now, the CRUD, and CARBON,  in the other engines,  ... AND the additional wear and tear, ..  the deterioriation that ROBS each of us of performance and cleanliness of the environment.  That's what WE as consumers have to gain ...

What are we waiting for?      

 

22 Comments – Post Your Own

#1) On March 24, 2010 at 12:53 PM, Vet67to82 (< 20) wrote:

Chesapeake Energy (CHK) CEO recently stated CHK could do one or two more joint ventures AND is looking to grow FIFTY percent in the next three years. 

Can Wal-Mart, IBM, or Intel say the same ... or even have a REMOTE chance to pull that growth off?

 

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#2) On March 24, 2010 at 9:08 PM, binve (< 20) wrote:

Good post Vet! I am very bullish on Natty long term, as we have discussed in the past. Thanks!

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#3) On March 24, 2010 at 10:03 PM, Vet67to82 (< 20) wrote:

Thanks for your reply binve. 

Now that the majors are climbing on the nat gas wagon, like the purchase of XTO, and the signing of MORE joint ventures ... I see change coming ... and to everyone's surprise ... probably SOONER than everyone else is expecting. 

The majors were raking in the "big bucks" with the price of crude ... then the bottom dropped out, crude went (crashed) to $30 from $140+ after contributing to the global financial meltdown.  The global economy CAN"T afford +$80/bbl crude so there MUST be a transition "fuel" and voila ... the USA just happens to have MORE nat gas than Saudi Arabia has crude. 

 Take that OPEC ...  ( put smiley face here )

 AND

Nat GAS ... per therm ... the BTU measure of heat ... nat gas is trading at about an 80 to 1 discount to crude.   

  ( AGAIN, put smiley face here )

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#4) On March 25, 2010 at 4:11 AM, FreeMortal (28.81) wrote:

Would either of you be able to explain to me why UNG is such a bad ETF?  Is it even worth riding out?  Thanks.

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#5) On March 25, 2010 at 11:58 AM, Vet67to82 (< 20) wrote:

Thanks for your reply FreeMortal. 

As per your inquiry on UNG there is a great deal of accessable , downloadable info on UNG's website:

 per:    http://unitedstatesnaturalgasfund.com/

  "The investment objective of UNG is for the changes in percentage terms of the units’ net asset value to reflect the changes in percentage terms of the price of natural gas delivered at the Henry Hub, Louisiana, as measured by the changes in the price of the futures contract on natural gas traded on the New York Mercantile Exchange that is the near month contract to expire, except when the near month contract is within two weeks of expiration, in which case it will be measured by the futures contract that is the next month contract to expire, less UNG's expenses. "

get the prospectus ( downloadable PDF - 132 pages ):
http://unitedstatesnaturalgasfund.com/PDFS/UNG-Prospectus.pdf

As to basic info, 50 percent plus USA homes use nat gas for heating and cooking, hot water, etc.  The current decline in nat gas is the expected "seasonal" drop in demand accompanied by warmer weather, hence LESS need for nat gas for home heating. 

However, due to the drop in nat gas prices, some coal fired plants switched over to "cheaper" nat gas ... so the market doesn't yet have comparable "numbers"  for this part of the demand equation, comparing week to week, this year to last year ... and so, I expect the market may be "surprised" from time to time, like when air conditioning season kicks in and power plants have to turn on the afterburners to cover that demand.  

UNG Fees and expenses
Expense Ratio 0.60%
Gross Expense Ratio 0.97%
Net Expense Ratio 0.97%
Management Fee 0.60%
 
 UNG Volatility measures
1-year standard deviation  48.82 
Mean  15.50 

UNG Top holdings
Company name % Net assets
Fidelity Instl MM Fds Government I  ....... 18.04%
Goldman Sachs FS Government Sel  .... 17.14%
Morgan Stanley Inst Liquidity Gov Inst  ...  8.79%
 Percentage of holdings ............................. 43.97%

Hope this helps ...

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#6) On March 25, 2010 at 1:00 PM, Vet67to82 (< 20) wrote:

United States Natural Gas Fund LP (NYSE Arca: UNG)         03/25/2010 12:30PM ET
$7.16 -$0.22    -2.98% Vol  21,591,230

Chart Checkup (15 min / 10 day - short term outlook)

Moving Average Price Compare  --  No current signals

Moving Averages  --  No current signals

Bollinger Bands
UNG's recent volatility has been greater than normal. This is evidenced by the increased distance between the upper and lower Bollinger Bands. These bands measure volatility using standard deviation and a large width is due to high volatility. Additionally, UNG is trading within its Bollinger Bands. This is a normal condition and suggests that the stock is neither overbought nor oversold relative to the recent price action.

Stochastics
The Stochastic Oscillator is registering a bullish signal as the %K line is above the %D. However, UNG is neither overbought nor oversold.

On Balance Volume
The On Balance Volume indicator (OBV) presently offers a bearish signal. This is because the slope of the indicator is negative and shows that there is a lack of buying interest.

Price Channel
UNG is trading within its price channel. This is a normal condition and suggests that the stock is neither overbought nor oversold relative to the price action over the last 5 minute period.

 

 

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#7) On March 25, 2010 at 1:46 PM, Vet67to82 (< 20) wrote:

 The CHK short positiion ( insert smiley face here )  ... The shorts, based on the pending end of the heating season, have increased their short position by about  2.5 million shares. 

 Duh! ( insert "duh" smiley face here )

 The "shorts" apparently aren't paying attention to CHK news announcements ( Hint = Adequate WARNING )....  Oh, like the CEO's expectation for one or two MORE joint ventures  ... perhaps to be announced in the next few weeks ... and neglect to consider the CASH influx to CHK and its shareholders ... when the jv's are "inked" as agreed and completed.  Can you PICTURE the shorts scrambling to buy back "borrowed" shares ... like throwing gasoline on a fire ...

 Share Statistics 
Average Volume (3 month): 14,742,900
Average Volume (10 day): 24,413,700
Shares Outstanding: 651.86M
Float: 644.50M
% Held by Insiders: 0.47%
% Held by Institutions: 73.60%
Shares Short (as of 26-Feb-10): 30.88M
Short Ratio (as of 26-Feb-10): 2.5
Short % of Float (as of 26-Feb-10): 5.80%
Shares Short (prior month): 28.39M

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#8) On March 25, 2010 at 1:49 PM, binve (< 20) wrote:

Hey Vet!

I am also *very* bullish on SWN long term, and will also be in for the short term after we get a pullback.

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#9) On March 25, 2010 at 2:00 PM, outoffocus (24.00) wrote:

I'm all for it.  But I've found FCG a better investment in Nat gas than UNG.  Don't believe me? Look at my CAPS points for each.

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#10) On March 25, 2010 at 2:38 PM, Vet67to82 (< 20) wrote:

Thanks for your replies binve (swn)  and outoffocus (fcg)  ... so here's a thanks via the short term outlook on the stocks you eached mentioned: swn and fcg  

 (1)  Southwestern Energy Co SWN:NYSE    03/25/2010 2:20PM ET
$38.51 -$0.91    -2.31%  Vol  3,559,613

S&P Rank 4 stars

Chart Checkup (15 min / 10 day - short term outlook)

Moving Average Price Compare  --  No current signals

Moving Averages  --  No current signals

Bollinger Bands - Bearish
SWN is trading at its lower Bollinger Band. This suggests that the stock price is low relative to its recent price action.

Stochastics  - Bullish
The Stochastic Oscillator is registering a weak bullish signal as the %K has crossed above the %D. However, the oscillator is currently below the critical value of 20, identifying SWN as oversold. An oversold condition means that the recent downwards momentum is not sustainable. Investors should watch for the oscillator to move above 20 which will increase the bullishness of this signal.

On Balance Volume - Bullish
The On Balance Volume indicator (OBV) shows that longer term selling pressure has given way to near term accumulation.

Price Channel - Bearish
SWN is trading near its lower price channel band. This suggests that the stock price is low relative to the action over the last 5 minute period.

 

(2) First Trust ISE-Revere Ntrl Gas Indx Fd FCG:NYSE Arca   03/25/2010 2:31PM ET
$17.04 -$0.38    -2.18% Vol  463,591

Lipper  Rank  n/a

Chart Checkup (15 min / 10 day - short term outlook)

Moving Average Price Compare  --  No current signals

Moving Averages  --  No current signals

Bollinger Bands  --  Bearish
FCG is trading near its lower Bollinger Band. This suggests that the stock price is low relative to its recent price action.

Stochastics  - Bullish
The Stochastic Oscillator is registering a weak bullish signal as the %K has crossed above the %D. However, the oscillator is currently below the critical value of 20, identifying FCG as oversold. An oversold condition means that the recent downwards momentum is not sustainable. Investors should watch for the oscillator to move above 20 which will increase the bullishness of this signal.

On Balance Volume  - Bearish
The On Balance Volume indicator (OBV) presently offers a bearish signal. This is because the slope of the indicator is negative and shows that there is a lack of buying interest.

Price Channel  - Bearish
FCG's recent volatility has been greater than normal. This is evidenced by the increased distance between the upper and lower bands that make up the price channel. Additionally, FCG is trading near its lower price channel band. This suggests that the stock price is low relative to the action over the last 5 minute period.

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#11) On March 28, 2010 at 10:19 PM, hanlerris (26.87) wrote:

There's a reason why we don't power vehicles with natural gas (except large vehicles like buses). Good train of thought, but oil is here to stay till we have more advances in motor/battery (which is even better than natural gas). Natural gas can certainly beat coal with this depressed price level for generation of electricity though!

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#12) On March 28, 2010 at 10:41 PM, ozzfan1317 (72.63) wrote:

I think we will see more large Natural gas powered public vehicles I already have a position in MCF and am looking to possibly pick up some CHK in the near term.

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#13) On March 29, 2010 at 11:57 AM, Vet67to82 (< 20) wrote:

Chesapeake Energy Corp CHK:NYSE   03/29/2010 11:52AM ET

$23.30+$0.93  +4.16%  Vol10,124,254

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#14) On March 30, 2010 at 3:09 PM, Vet67to82 (< 20) wrote:

Here is a real good ( +1 Recs ) article on Nat Gas and Chesapeake Energy Corp

" Fearful Stocks for Greedy Investors "

By Rich Smith (TMFDitty)
March 30, 2010

... Link: ... http://msn.fool.com/investing/value/2010/03/30/fearful-stocks-for-greedy-investors.aspx?logvisit=y&source=eedmsnlnk0010001&published=2010-03-30

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#15) On March 30, 2010 at 9:38 PM, walt373 (99.88) wrote:

Would either of you be able to explain to me why UNG is such a bad ETF?  Is it even worth riding out?  Thanks.

I think a lot of it is due to contango. See article here.

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#16) On March 30, 2010 at 11:24 PM, Vet67to82 (< 20) wrote:

Thanks for your reply walt373. 

  I wrote several blogs on the contango in crude, the using of ships as storage, as well as the possible detrimental effect on pipelines and storage inhibiting delivery to refineries and utilities, ... like power plants.  If you read through my blogs ... you'll see that I "got it" a LONG time ago.  Here, unlike UNG, the speculators were taking physical possession of the crude, leasing the ships for long term storage, tying up storage in Cushing, OK ( and pipelines) , and waiting for the inevitable price increases they KNEW were coming. 

 I believe the problem began as these commodities funds and ETFs originated during a period of "backwardation" ... wherein a profitable current month could be rolled into a less expensive near month ... and the difference was CASH profits. 

  Now a "contango" effect is pervasive through out the commodities, wherein too much money is chasing too few real products ( the cash market = you buy "it", you own and take possession of "it" PLUS costs, like transportation, storage, and INSURANCE, etc )    ... and ... to avoid taking possession of the commodity in question, the current month's futures are rolled into the next month's "more expensive" futures, creating a cash loss and expenses keep eating away at the Net Asset Value (NAV). 

  UNG is stuck, like a child on a swing, in the the bottom of the heating season demand ... and before "air conditioning" season kicks in forcing utilities to bring in more natgas to meet demand.  Here the power companies don't really care about the price of natgas as they can pass it along, what they care about is the volutility in price so they can profit from them in trades and swaps. 

So, UNG will be ( may be) a BUY in August ... September time frame.           

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#17) On March 31, 2010 at 11:33 AM, Vet67to82 (< 20) wrote:

Finally, a reality that things just can't keep going as they are ...

Obama to Open Offshore Areas to Oil Drilling for First Time

By JOHN M. BRODER              The New York Times

 Published: March 30, 2010

http://www.nytimes.com/2010/03/31/science/earth/31energy.html?partner=rss&emc=rss 

 

 

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#18) On March 31, 2010 at 11:41 AM, Vet67to82 (< 20) wrote:

New York Times (popup) map of proposed drilling areas ...

http://www.nytimes.com/imagepages/2010/03/31/science/earth/31energy-graf01.html?ref=earth

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#19) On April 03, 2010 at 5:37 PM, Vet67to82 (< 20) wrote:

Chesapeake Energy Corp  (CHK)

Closing price 3/31/2010....: $ 23.64

1 year target....:      $34.71

Potential Reward:  46.827%

Foward P/E ...:  8.49

PEgrowth (PEg)  ratio ...: 2.93

Price/Book Value ....: 1.35

and Dividend $0.30 (1.30% yield)

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#20) On May 10, 2010 at 1:55 PM, Bad2dBone99 (< 20) wrote:

Previous +1 rec   :(    only once

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#21) On December 29, 2010 at 8:46 AM, exdividendday (< 20) wrote:

It could be better to invest in gas and pipeline operator. I researched 10 stocks from the industry with dividend yields above 5 percent. Here are my results: 

 http://long-term-investments.blogspot.com/2010/09/10-oil-gas-pipeline-operator-with.html

The average dividend-yield amounts to 7.00 percent while the average P/E ratio is 21.04. Operating margin is 28.33 percent in average and net profit margin finally 20.33 percent.

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#22) On January 02, 2011 at 1:07 PM, RaiseMyDiv (56.45) wrote:

Interesting post. What is your current take on nat. gas companies? Just wondering, since it has been a while since this was posted.

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