Gareth Soloway
Chief Market Strategist, InTheMoneyStocks.com
As cold weather has blanketed the United States from east to west and north to south, natural gas has hovered at the lows until now. Natural gas stockpiles fell for the first time in nine months, down 64 billion cubic feet in the week ended Dec. 5. Natural gas has been one of the few commodities to not see a runup as with the likes of gold and oil on the back of a weak dollar. However, today things may have changed. What is so amazing about the jump in natural gas today is that Chesapeake Energy Corp. (NYSE: CHK), a leader in natural gas production, technically signaled the pop with a hit of the daily 200ma yesterday. That hit is a dead on alert to watch for a pop in the stock price of CHK. Sure enough, as if the technicals actually dictate the news and inventory reports, natural gas pops, helping Chesapeake jump off its 200ma.
Other key natural gas stocks to watch are XTO Energy Inc. (NYSE: XTO) and Devon Energy Corp. (NYSE: DVN). These are seeing similar pops in their share prices though Chesapeake is the only one that had the perfect technical chart setup.
Small cap natural gas plays, which are always a favorite sympathy play should natural gas continue to run higher are Royale Energy Inc. (NasdaqCM: ROYL) and NGAS Natural Resources (NasdaqGS: NGAS). These could see a major price appreciation due to short squeezes and low floats. Cheniere Energy Inc. (AMEX: LNG), an Amex play has over 10% short. Watch these closely should natural gas continue to run for a few days or be putting in a long term bottom.
Below is a chart showing Chesapeake hitting the 200ma on the daily. Below that is the chart of the intra day UNG as the natural gas inventories were released. Note how CHK told technical traders to expect a bounce today and sure enough, inventories confirmated it.
RealTick graphics used with permission of Townsend Analytics, Ltd. ©1986-2009 townsend Analytics, Ltd. All Rights Reserved. RealTick is a registered trademark of Townsend Analytics, Ltd.
Gareth Soloway
Chief Market Strategist, InTheMoneyStocks.com
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