In our previous articles we pointed out an investment that could pile up big profits and we have entered and already have a double digit profit. Another buying opportunity could be presenting itself for investors who are not yet on board. The investment is natural gas, the move has started and over the longer term natural gas looks set for far higher prices. Lets look at why the commodity is going higher and how it could be an ideal time to enter for triple digit gains. Long term fundamentals for higher prices are: 1.Crude oil prices look set to remain high. On the other hand, gas prices are cheap. 2.Consumers are already switching to gas because of the high price of oil. 3.In the US gas is a domestic affair and is not subject to supply interruptions from overseas events that affect oil. 4.Demand will outstrip supply in the near future as old fields cannot produce enough and are being depleted quickly. New fields on the other hand are not coming on board quick enough. 5.Summers are getting hotter and winters are getting colder, increasing demand. 6.The hurricane seasons are becoming more severe and this years is expected to be one of the most active on record and could hurt rig production. All the above add up to higher prices in natural gas and an opportunity to make money fast. Its not complicated its simple supply and demand. The technical picture shows the potential of this trade and prices are 50% of their highs so there is plenty of upside. The market on price charts has formed a double bottom at the middle of the Bollinger band and if prices can hold here and pick up momentum, then prices should move higher The key is to watch the stochastic indicator to turn up with bullish divergence and confirm the advance. This is one of the best indicators to time entry and prevents you getting into markets that are not on the move Caution Natural Gas is extremely volatile, so the best way to trade for most traders is with options. Options provide a combination of limited risk, with unlimited profit potential and provide peace of mind. If using options keep in mind this is long term trade and there will be lot of short term volatility. Options bought should be at or in the money, with plenty of time to expiry to ride out short term price swings to the downside. If you want to make money fast and you see the logic of the above, take a closer look at natural gas which could be one of the big bull commodity markets of 2006. |
