Archive for the ‘Natural Gas’ Category:
Go for Profits with International ETFs
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Let me ask you a question. Suppose you have the ability to invest in any stock market in the world. One of the largest markets has lagged badly for many years now. And there are few reasons to think the situation will improve.
Would it make sense to put the bulk of your assets in that relatively weak market?
“No, of course not,” you will probably say. Good for you!
Unfortunately, most U.S. investors are making the wrong choice … and many so-called “experts” are cheering them on. How can this be?
Simple: The weak lagging market I mentioned above is the U.S.! And sadly, thousands of professional financial advisors tell their clients to stick with the “safety” of U.S. stocks.
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I wish I knew why so many of my peers refuse to face reality. Maybe it’s just a force of habit.
However, those investors do have the ability to invest around the world — with hundreds of international exchange traded funds (ETFs).
So today I’m going to give you three challenging questions you should ask any investment advisor, stock broker or newsletter editor who tells you to keep most of your money in U.S. stocks, mutual funds or ETFs.
Challenging Question #1:
Is it hard for me to invest in
non-U.S. stock markets?
There was, in fact, a time when practical considerations made it very difficult for American investors to get overseas exposure. Many brokers couldn’t process foreign trades, the tax paperwork was complicated, and it was hard to get news from off-the-beaten-path places.
These barriers are no longer relevant — and anyone who tells you otherwise is sadly uninformed. Let’s look at them in order …
- With a few mouse clicks or a quick phone call, you can buy or sell an ETF like iShares MSCI Singapore (EWS) just as easily as an S&P 500 index fund. Both trade on the same exchanges. No need to get up in the middle of the night and call a broker on the other side of the world.
- Tax paperwork? You’ll have to speak with your Congressman if you want to get rid of it completely. A good interim step is the simple tax reporting that you can get even from discount brokers today. You don’t have to frustrate yourself trying to calculate your cost basis … unless you just enjoy that sort of thing.
- International news is easy to find on the web now. Sometimes the sources are questionable. But there is no shortage of basic news and analysis, even on the most obscure exchanges. You can read the local newspapers online at the same time as Wall Street’s analysts.
Therefore, the argument that investing overseas is somehow hard for the average investor just doesn’t hold water.
Challenging Question #2:
Which ETFs have the best short-term
and long-term performance?
The table below shows you the top ten best-performing unleveraged equity ETFs for the one-year and five-year periods ended 11/12/2010. All are readily accessible to U.S. investors.
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You’ll notice that most of the top-ranked ETFs for one year, and ALL of the top-ranked for the last five years, specialize in international markets, particularly emerging markets. Yet relatively few investors have money in them!
This brings us to our third and most important question:
Challenging Question #3:
Why should I invest my money anywhere else?
To me, the answer to this question is quite obvious. Global economic power is shifting away from North America and Western Europe. The new leaders are in Asia and Latin America.
I’ve written about that mega-trend many times. Of course, I’m not saying there are never any opportunities to profit in the U.S. Obviously there are. My point is the potential is even greater elsewhere.
And to me, the logical answer is to follow the momentum wherever it leads.
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Are international and emerging markets ETFs volatile? Yes, of course. They’re subject to political unrest … currency turmoil … natural disasters … and assorted other risks.
These are pretty much the same risks you take in U.S. stocks!
Like it or not, risk is everywhere. You can’t escape it — but you can use it wisely. I think international ETFs are one of the wisest risks an investor can take. That’s why I use them extensively. You should do likewise if you want to survive and profit in the coming decades.
You can get specific buy and sell recommendations for many global ETFs in my International ETF Trader service. Martin Weiss and I made a free video presentation to tell you more. Click here to check it out.
Best wishes,
Ron
This investment news is brought to you by Money and Markets. Money and Markets is a free daily investment newsletter from Martin D. Weiss and Weiss Research analysts offering the latest investing news and financial insights for the stock market, including tips and advice on investing in gold, energy and oil. Dr. Weiss is a leader in the fields of investing, interest rates, financial safety and economic forecasting. To view archives or subscribe, visit http://www.moneyandmarkets.com.
Natural Gas Daily Technical Outlook
Nymex Natural Gas (NG)
Intraday bias in Natural Gas remains neutral for the moment and some more consolidation might be seen. Nevertheless short term outlook will remain bullish as long as 4.351 minor support holds. Above 5.120 will bring resumption of whole rise form 2.409 and should target 38.2% retracement of 13.64 to 2.409 at 6.7 next. However, considering bearish divergence condition in 4 hours MACD, break of 4.351 will indicate that a short term top is formed and will bring deeper pull back instead.
In the bigger picture, medium term fall from 13.69 is treated as part of the long term consolidation pattern that started at 15.78 back in 2005. The whole consolidation might have completed at 2.409 after meeting 100% projection of 15.78 to 4.593 from 13.69 at 2.50. We’ll prefer the bullish case as long 55 days EMA (now at 3.842 holds) and expect the current rise from 2.409 to extend further to 61.8% retracement of 13.64 to 2.409 at 9.38 in medium term.
Nymex Natural Gas Continuous Contract 4 Hours Chart
Nymex Natural Gas Continuous Contract Daily Chart
Commodities Edge Higher on a Quiet Day
Crude oil rises to 72.15 in Asia Monday. However, trading volume is thin as Japan, US and Canada markets are closed on holidays today. Last Friday, Dow Jones Industrial Average climbed +4% to 9684.94 and S&P 500 rose +4.5% to 1071.49. Rallies in stock indices to 1-year high spurs interest in oil markets as investors anticipate recovery in energy market consumption.
Despite the improved sentiment, crude oil price will continue to gyrate within recent trading of 65-75 until concrete evidence of demand recovery is seen. Over the weekend, Kuwait’s oil minister Sheikh Ahmad al-Abdullah al-Sabah said that ‘oil prices between 60 and 80 are suitable for exporters and importers’. Judging from outcomes from recent OPEC meetings and comments from member countries, OPEC seems to be satisfied with current price level. The likelihood for further output cut is low in coming few months. In fact, rising spare capacity and rise in oil price have triggered some members to produce more than their quotas. The International Energy Agency estimated OPEC’s compliance has fallen to 62% in September, compared with 66% in August and over 80% in the first quarter.
Gold price has little change after plummeting -0.7% last Friday. Although currently recovers to 1051, the yellow metal may still have risk to decline on long liquidation and USD’s technical rebound. However, gold should resume its uptrend after consolidation. Global central banks’ diversification away from the dollar is expected to pressure USD further. At the same time, diversification would increase central bank’s purchase of gold.
Commitments of Traders
- Crude Oil: Net speculative long positions rebounded to 50006 contracts last week as oil price recovered. While staying below the peak of 62216 contracts 2 weeks ago, net longs in crude oil continued to hover around high level in 2009, suggesting traders were not much affected by stricter CFTC regulations
- Natural Gas: Net shorts contracted for the second consecutive week. Gas price has rebounded strongly in recent weeks but we worry that high gas price would delay demand recovery. Record high gas storage should continue pressure on the cash market which in turn forces the futures market to move lower
- Gold: Net speculative long positions reached record high of 239668 contracts. At long positions have become more stretched, we feel it more necessary for gold price to correct
- Silver: Net speculative long positions pulled back after rising for 7 weeks. Recent rally in silver have been simply an amplification of gold’s rise. Similar to gold, silver is prone to a correction before resuming the uptrend
- Platinum: Net long positions recovered to 17955 contracts
Source: Oil n Gold
Weekly Fundamental Outlook for Energies and Metals – Industry Experts Raised Demand Outlook on Oil
After the RBA’s rate hike at the October meeting, biggest topic in the market has been ‘who’s the next central bank in the developed world to tighten monetary policy?’. While analysts have diverse opinions on which of RBNZ, BOE, ECB and BOC will be the next candidate, the majority anticipates the Fed to keep its unprecedentedly low policy rate at 0-0.25% until 2Q10 and BOJ’s 0.1% rate will stay even longer.
Interest rate differential continued to pressure USD. The dollar index plummeted to 14-month low at 75.996 Thursday before rebounding as investors took Fed Chairman Ben Bernanke’s speech as hawkish. The dollar index declined -0.7% on weekly basis. Weakness in USD drove demand for commodities and the Reuters/Jefferies CRB Index surged +3.8% to close at 262.55.
Crude Oil
Crude oil price was under pressure amid USD’s rebound earlier in the day. However, price pared losses after the International Energy Agency (IEA) upgraded the demand outlook for 2010 for a third consecutive month. The benchmark contract eventually settled at 71.77, adding +2.6% on weekly basis.
The US Energy Department (EIA) and the International Energy Agency released monthly reports last week. Both agencies revised upward their outlooks on world oil consumptions amid improvement in macroeconomic outlook.
The US Energy Department forecast crude demand will increase to 84.77M bpd in 2010 after a drop to 83.67M bpd in 2009. The 2010 forecast was +0.18M bpd above the projection made in September. However, the Department did not change the forecast on WTI crude oil price which remains to be 75/bbl by December 2010.
The International Energy Agency anticipated global oil consumption would rise to 86.1M bpd in 2010, +1.7% yoy as driven by +3.6% demand growth in developing countries while ‘demand from the world’s developed economies is expected to remain stagnant in 2010 after falling -4.5% this year’. The estimate was +0.35M bpd higher than the projection made in September. IEA also upgraded its 2009 consumption forecast to 84.6M bpd, -1.9% yoy. In September, the agency anticipated the demand will drop -2.2% on annual basis.
2 weeks ago, a meeting was carried out between permanent members of the UN Security Council and Germany, and Iran regarding Iran’s nuclear program. Unexpectedly, the meeting was ‘peaceful’ and the progress was better than expected. Iran agreed to let the International Atomic Energy Agency (IAEA) visit the Qum site on October 25. Moreover, Iran agreed to send most of the LEU stockpiles to Russia for further enrichment and then to France for medical research purposes. The deed aims at lowering Iran’s LEU level to what is required for making nuclear weapons.
The geopolitical tension between Iran and the world did boost oil buying. However, how serious is its impact on oil supply and price? In our view, the disruption on oil production is not that severe and the therefore, the impact on oil price is not too much.
Take the invasion of Iraq in 2003 as an example. In Iraq, oil production dropped -36% yoy to 1.34M bpd in 2003. However, oil production in the country had been falling -16% yoy to 2.12M bpd in 2002 and -4% yoy 2.52M bpd in 2001 after making a 20-year of 2.61M bpd in 2000. More importantly, crude production rapidly recovered +50% to 2M bpd in 2004.Concerning oil price, WTI crude rose +6% a week after the war began. However, the rally slowed down and eventually reversed to a fall of -12% in less than 2 months’ time.
Natural Gas
Natural gas price dropped -3.9% to settle at 4.77 Friday. Although the benchmark contract gained +1.1% on weekly basis, outlook remains uncertain and gas price should continue to trade with high volatility.
The US Energy Department forecast that total natural gas consumption will drop -2% in 2009 and -0.2% 2010. There compare to the estimates of a decline of -2.4% in 2009 and 0% in 2010. According to the Department, ‘weak economic conditions continue to hamper the industrial sector, where the most recent data show natural gas consumption is down by -12.4% through July compared with the same period last year. With lower consumption in the residential and commercial sectors as well, natural gas use in the electric power sector continues to serve as the only demand outlet for increased natural gas supplies’.
Natural gas has rebounded strongly in recent weeks. However, we believe price should remain at low level for some more time so as to improve the fundamentals.
US gas storage increased +69 bcf to 3658 bcf in the week ended October 2. The level is +15% above 5-year average. Although the number of gas rigs has dropped more than -50% from its peak in September 2008, recent data form Baker Hughes’s data showed building of rigs over the past few weeks. We believe drilling activities pick up because of rise in gas prices.
On the demand side, the EIA stated that ‘electric power sector continues to serve as the only demand outlet for increased natural gas supplies’. However, further increase in gas price suggests that gas will lose its place to coal and the last resort for the abundant gas storage will disappear. Therefore, we’d prefer gas price to fall more in coming month so that the demand/supply outlook can be rebalanced.
Precious Metals
Comex gold halted the 5-day rally by retreating -0.7% Friday. Settling at 1048.6, the December contract surged +4.4% over the week. Last week’s rally was impressive as gold has broke above the peak made in March 2008 after trading below it for one and a half years. The breach was decisive and price closed above it over the past 4 days.
The retreat last Friday was driven by USD’s strength amid speculations that the Fed will increase interest rate sooner than previously anticipated after Chairman Ben Bernanke’s speech. Investors probably seek more evidence about economic recovery after the RBA hiked its policy rate earlier in the week. In fact, Bernanke’s stance has not changed from what he said in WSJ in July. Meanwhile, a pullback or consolidation in gold price is warranted due to long liquidation. However, we remain bullish on gold price in the long term.
Major reasons driving gold’s rally are weak USD, inflation expectations and minimal sales from central banks.
The Fed has reduced the policy rate to 0-0.25% since late 2008, making it one of the countries offering the lowest funding rates. Last month, USD ‘took over’ Japanese yen as the funding currency for carry trades as the LIBOR rate for USD has dropped below than of yen. G-17′s non-intervening approach to USD’s depreciation and RBA’s beginning of the tightening cycle put further pressure on the greenback and the dollar index will likely resume its long-term downtrend soon.
Although global central banks have been emphasizing that inflation outlook is subdued, investors do not seem to hold the same view. US’ University of Michigan survey showed that consumers anticipated inflation will reach +2.2% in a year, significantly above the current level while UK’s inflation attitude survey by the BOE showed that consumers expected inflation to reach +2.4% in a year.
While IMF’s sales of 403 metric tons gold in coming years does remain as an overhang to gold price, we do not believe it will have any material impact to gold price. As we mentioned before, the sales will be carried out in 4-5 years at market price and the IMF will ensure it will not cause fluctuation in the gold market. IMF’s gold sales will be compensated by gold buying in central banks. Given the huge budget deficits in the US, global central banks have been diversifying away from USD. By August 19, gold sales under CBGA II were 149 metric tons, compared with 358.3 metric tons in 2007/08 and 475.8 metric tons in 2006/07.
Among the above drivers, USD’s weakness is the most prominent one is pushing gold high. In the chart below, the regression line for September data has higher slope than the one for June- August data. This suggests the dollar impact on gold has been stronger than before.
Silver amplified gold’s rally and became the best performer in the precious metal complex last week. In fact, silver price rallied +65% since the beginning of 2009, compared with +21% in gold. Certainly, it was to a large extent a catch-up play as silver plunged -26% while gold gained modestly in 2008. Although gold price has broken its 2008-high, silver, after the +9% rally last week, remained -17% below its record level.
Investor Jim Roger said that silver should have better growth prospect than gold in the precious metal complex as industrial demand on these metals will increase as global economy recovers.
At the end of 2008, gold-to-silver price rose above 80 as silver price plummeted. Recently, the ratio has fallen to around 60. We believe the ratio lies at a fair level now. However, as both gold and silver rallies have been driven by robust investment demands, deeper correction will probably be seen in silver than in gold as positioning in the former is more stretched.
Base Metals
The complex rebounded strongly last week as driven by falling USD, strong equity market as well as some industry specific good news. Alcoa, the largest US aluminum producer, surprisingly reported profits of $77M in 3Q09. Although the figure represented a decline of -33% from the same period last year, it exceeded market expectation of a loss. Concerning demand outlook, the company said the end-market has started to stabilize and demand is improving. Potential production disruptions also helped boost metal prices. BHP, the world’s largest miner has been facing potential strike as its Chilean copper mine as workers demanded for a wage raise. Over 20% of copper-mine output will be affected in 3-6 months.
China will release the preliminary trade data for September and we should see further decline in imports. This remains an overhang for base metal prices in the near-term.
Source: Oil n Gold
Natural Gas Daily Technical Outlook
Nymex Natural Gas (NG)
No change in natural gas’ outlook so far. While some more sideway trading might be seen, further rise is expected with 4.351 minor support intact. Current rebound from 2.409 is still in favor to extend further to 38.2% retracement of 13.64 to 2.409 at 6.7 next. However, considering mild bearish divergence condition in 4 hours MACD, break of 4.351 will indicate that a short term top is formed and bring longer consolidations before resuming the rise from 2.409.
In the bigger picture, medium term fall from 13.69 is treated as part of the long term consolidation pattern that started at 15.78 back in 2005. The whole consolidation might have completed at 2.409 after meeting 100% projection of 15.78 to 4.593 from 13.69 at 2.50. We’re looking at the prospect of medium term rise to 61.8% retracement of 13.64 to 2.409 at 9.38 in medium term.
Nymex Natural Gas Continuous Contract 4 Hours Chart
Nymex Natural Gas Continuous Contract Daily Chart
Natural Gas Daily Technical Outlook
Nymex Natural Gas (NG)
Natural gas is staying in tight range today and some sideway trading might be seen. But after all, further rise is expected with 4.351 minor support intact. Current rebound from 2.409 is still in favor to extend further to 38.2% retracement of 13.64 to 2.409 at 6.7 next. However, considering mild bearish divergence condition in 4 hours MACD, break of 4.351 will indicate that a short term top is formed and bring longer consolidations before resuming the rise from 2.409.
In the bigger picture, medium term fall from 13.69 is treated as part of the long term consolidation pattern that started at 15.78 back in 2005. The whole consolidation might have completed at 2.409 after meeting 100% projection of 15.78 to 4.593 from 13.69 at 2.50. We’re looking at the prospect of medium term rise to 61.8% retracement of 13.64 to 2.409 at 9.38 in medium term.
Nymex Natural Gas Continuous Contract 4 Hours Chart
Nymex Natural Gas Continuous Contract Daily Chart
Natural Gas Daily Technical Outlook
Nymex Natural Gas (NG)
Natural gas’s rise lost some steam after taking out 4.975 but after all, further rise is expected with 4.351 minor support intact. Current rebound from 2.409 is still in favor to extend further to 38.2% retracement of 13.64 to 2.409 at 6.7 next. However, considering mild bearish divergence condition in 4 hours MACD, break of 4.351 will indicate that a short term top is formed and bring longer consolidations before resuming the rise from 2.409.
In the bigger picture, medium term fall from 13.69 is treated as part of the long term consolidation pattern that started at 15.78 back in 2005. The whole consolidation might have completed at 2.409 after meeting 100% projection of 15.78 to 4.593 from 13.69 at 2.50. We’re looking at the prospect of medium term rise to 61.8% retracement of 13.64 to 2.409 at 9.38 in medium term.
Nymex Natural Gas Continuous Contract 4 Hours Chart
Nymex Natural Gas Continuous Contract Daily Chart
Natural Gas Weekly Technical Outlook
Nymex Natural Gas (NG)
Initial outlook remains neutral this week as sideway consolidation from 4.975 might continue. Nevertheless, as noted before, natural gas has likely bottomed at 2.409 already. Downside of the consolidation should be contained above 3.635 support and bring rally resumption. Above 4.975 will target 38.2% retracement of 13.64 to 2.409 at 6.7 next. On the downside, break of 3.635 is needed to indicate that the rebound has completed. Otherwise, short term outlook will remain bullish.
In the bigger picture, medium term fall from 13.69 is treated as part of the long term consolidation pattern that started at 15.78 back in 2005. The whole consolidation might have completed at 2.409 after meeting 100% projection of 15.78 to 4.593 from 13.69 at 2.50. We’re looking at the prospect of medium term rise to 61.8% retracement of 13.64 to 2.409 at 9.38 in medium term.
Nymex Natural Gas Continuous Contract 4 Hours Chart
Nymex Natural Gas Continuous Contract Daily Chart
Nymex Natural Gas Continuous Contract Weekly Chart
Nymex Natural Gas Continuous Contract Monthly Chart
Natural Gas Daily Technical Outlook
Nymex Natural Gas (NG)
Natural gas’s pull back from 4.975 is still in progress and intraday bias remains neutral for the moment as some more consolidations could be seen. Nevertheless, as discussed before, a bottom should be formed at 2.409 already. Downside should be contained above 3.635 and bring rally resumption. Current rise is expected to continue towards 38.2% retracement of 13.64 to 2.409 at 6.7 next. On the downside, break of 3.635 is needed to indicate that the rebound has completed. Otherwise, short term outlook will remain bullish.
In the bigger picture, medium term fall from 13.69 is treated as part of the long term consolidation pattern that started at 15.78 back in 2005. The whole consolidation might have completed at 2.409 after meeting 100% projection of 15.78 to 4.593 from 13.69 at 2.50. We’re looking at the prospect of medium term rise to 61.8% retracement of 13.64 to 2.409 at 9.38 in medium term.
Nymex Natural Gas Continuous Contract 4 Hours Chart
Nymex Natural Gas Continuous Contract Daily Chart
Natural Gas Daily Technical Outlook
Nymex Natural Gas (NG)
Intraday bias in natural gas is turned neutral for the moment and some consolidations might be seen. Nevertheless, as discussed before, a bottom should be formed at 2.409 already. Downside should be contained above 3.635 and bring rally resumption. Current rise is expected to continue towards 38.2% retracement of 13.64 to 2.409 at 6.7 next. On the downside, break of 3.635 is needed to indicate that the rebound has completed. Otherwise, short term outlook will remain bullish.
In the bigger picture, medium term fall from 13.69 is treated as part of the long term consolidation pattern that started at 15.78 back in 2005. The whole consolidation might have completed at 2.409 after meeting 100% projection of 15.78 to 4.593 from 13.69 at 2.50. We’re looking at the prospect of medium term rise to 61.8% retracement of 13.64 to 2.409 at 9.38 in medium term.
Nymex Natural Gas Continuous Contract 4 Hours Chart
Nymex Natural Gas Continuous Contract Daily Chart
