Natural gas has spiked more than 30% in the last three months. It’s a move that Dan Dicker, President of MercBlock called for the last time he came by Breakout. Now that the price is up it would seem, according to Dicker, that the day traders piling in on the action, leading to a significant increase in volatility.
“Everytime the weather seems to want to moderate you’d think the market would come down,” Dicker says. The problem are those day traders trying to make a quick buck and so the usual techniques for playing the now hot commodity are not working.
So what are you to do if you simply MUST play this boom in natural gas? Dicker has you covered. “If you’re looking to buy for example some natural gas stocks, everytime the price [of natural gas] comes under $4.60 or $4.70, that I think is a good idea for the long haul.” And “long haul” is key he says because the volatility doesn’t seem to be going anywhere.
As for which stock to grab, Dicker likes Southwestern Energy Company(NYSE:SWN). “It’s in the Fayetteville [shelf], I know the Marcellus is hot and therefore Cabot Oil & Gas Corporation(NYSE:COG) is a very big play over there…Southwestern is the one that hasn’t moved yet, I think that’s the one you should have.”
You can see the full “Breakout” segment below:
Description:United States Natural Gas Fund LP is a Delaware limited partnership incorporated in the USA. The Fund’s objective is to have changes in percentage terms of its unit’s net asset value reflect the changes of the price of Natural Gas delivered to Henry Hub Louisiana as measured by changes in percentage terms of the price of the Natural Gas futures contract on the NYMEX.
Description:iPath Dow Jones-UBS Natural Gas Total Return Sub-Index ETN is an exchange-traded note issued in the USA. The Notes will provide investors with a cash payment at the scheduled maturity or early redemption based on the performance of the underlying index the Dow Jones-UBS Natural Gas Total Return Sub-Index.