UK Stockmarket 2009 and beyond

cloud_dog

Not sure if this is one of my better ideas or not. I've started to take a position in NGAS.

The spot price of natural gas and NGAS have been in a longish term decline and NGAS is approaching (hopefully) some strong support around the 27.50p mark. I'll see how it pans out and depending on the action I may add, although I will stop out at 27p.

tradetime

cloud_dog wrote: »

Not sure if this is one of my better ideas or not. I've started to take a position in NGAS.

The spot price of natural gas and NGAS have been in a longish term decline and NGAS is approaching (hopefully) some strong support around the 27.50p mark. I'll see how it pans out and depending on the action I may add, although I will stop out at 27p.

Careful with that cloud, haven't looked at what it is based on or how it is constructed, or even how Nat Gas prices in the UK (assuming it is based on those) are arranged. But in the US Nat Gas has had a severe contango for months now which has killed the tracker UNG. Nat Gas can be quite hard to play, particularly by futures derivatives that are held through rollover.

cloud_dog

tradetime wrote: »

Careful with that cloud, haven't looked at what it is based on or how it is constructed, or even how Nat Gas prices in the UK (assuming it is based on those) are arranged. But in the US Nat Gas has had a severe contango for months now which has killed the tracker UNG. Nat Gas can be quite hard to play, particularly by futures derivatives that are held through rollover.

Yeah, thanks.

I was following the leveraged version (LNGA) and you can quite easily see the effect of contango when you compare the fund price against Nat Gas price.

I consider this to be a short-term transaction for me and I've got a pretty tight stop/loss so, eyes down. :eek:

tradetime

No worries, cloud, sounds like you've considered all the implications, unlike many I've watched on BB's tearing their hair out all year, understanding the concept of contango, but not realizing until exposed to it, how destructive it can be to a fund like that.
Late in '08, just before Xmas I had a discussion with some people about NG, we all agreed it was underpriced, or so we thought, (this is the US stuff) was trading at just under $5 I think, no way to work out a timeframe, so I went the producers route and bought an ETF called FCG at $11, some of the others bought UNG at $19.
Nat Gas is worth $4 today, and UNG about $7. FCG on the other hand is trading in the $18's
Best of luck

bobbyj_2

I mentioned TMC a few weeks ago, going well today and a stonking recovery play on firming Nickel price, nav is close to 100p against current 32p. No debt neither which is nice.

tradetime

bobbyj wrote: »

I mentioned TMC a few weeks ago, going well today and a stonking recovery play on firming Nickel price, nav is close to 100p against current 32p. No debt neither which is nice.

Nice call, am not a stock picker so I tend not to get involved in many individual stocks, but quite a few of the other posters here do.

turbobob

cloud_dog wrote: »

Not sure if this is one of my better ideas or not. I've started to take a position in NGAS.

The spot price of natural gas and NGAS have been in a longish term decline and NGAS is approaching (hopefully) some strong support around the 27.50p mark. I'll see how it pans out and depending on the action I may add, although I will stop out at 27p.

Interesting. What made you go for natural gas?

Commodities have a base which is the cost of production. If companies cannot sell the product for more than it costs to produce, then logically they cut production, which should in turn push prices back up. Wonder if natural gas is near that level.

cloud_dog

bobbyj wrote: »

I mentioned TMC a few weeks ago, going well today and a stonking recovery play on firming Nickel price, nav is close to 100p against current 32p. No debt neither which is nice.

TMC is in my portfolio, been in (and out of it) for a few years. Was going to add some more when they dropped back to 24p recently but decided to add to MXP (which has been pretty flat waiting on news).

cloud_dog

turbobob wrote: »

Interesting. What made you go for natural gas?

Commodities have a base which is the cost of production. If companies cannot sell the product for more than it costs to produce, then logically they cut production, which should in turn push prices back up. Wonder if natural gas is near that level.

From a basic resource (commodity) perspective I just think gas has a lot of upside. Having said that the recent fundamentals (not such a cold winter, lots of reserves, etc) haven't helped support the price.

The decision to go in is primarilly TA based (how far its fallen, support levels), having said that since I bought it has dropped almost down to the 27p level. so I'm at my 'should I stay or should I go' point rather more quickly than I thought. I think I will have to give it the benefit of the doubt and see what prices finish the day at and make a decision tomorrow.

tradetime

turbobob wrote: »

Interesting. What made you go for natural gas?

Commodities have a base which is the cost of production. If companies cannot sell the product for more than it costs to produce, then logically they cut production, which should in turn push prices back up. Wonder if natural gas is near that level.

Probably not in the US, many people were relying on the old Oil / Gas ratio, maybe 6:1 can't remember offhand. Unfortunately Shale Gas changed all of that, recent technological advances make shale gas far more economical to produce, but also the upscaling, if I remember correctly the US now has the Gas equivalent to 10 times Saudi Arabia's oil reserves, so the whole playing field has changed.

Europe of course may be a whole different story, I have no experience with gas production in Europe, I know there is a rush to look at shale, but they are way behind the US in that respect.