UK Stockmarket 2009 and beyond

ses6jwg

sabretoothtigger wrote: »

Just thought I'd follow this up as I just read this :



Lucky escape!


http://www.telegraph.co.uk/finance/newsbysector/industry/engineering/7523511/Jarvis-calls-in-administrators-after-banks-refuse-to-help.html




One the companies I hold has some consulting work on the rails, hopefully its more diversified to be too effected

Luckily, I offloaded Jarvis soon after I bought them.:T

ses6jwg

Does anyone have any views on NGAS?

The price of natural gas has collapsed over recent years, and has justhit a 6 month low, can we see demand picking up

StevieJ

sabretoothtigger wrote: »

http://www.benzinga.com/191010/sure-looks-like-a-top-vix-nyse-dow-gold

The VIX fell from 2002 to Jan 2007 (10.42) the market toppled over Feb 2007 but soon recovered to new highs, by the time the market finally topped in July 2007 the Vix was showing 23.5. It seems to me that the Vix was at a similar level to today right through the previous bull market 2002 - 2007.

http://finance.yahoo.com/q?s=^vix

cloud_dog

ses6jwg wrote: »

Does anyone have any views on NGAS?

The price of natural gas has collapsed over recent years, and has justhit a 6 month low, can we see demand picking up

Yes. Have recently exited my NGAS position (small £50 loss).

From a TA perspective it looks as though it should be preping for a move up, and maybe it will, but from a fundamentals perspective its not looking great. Even though there has been cold winters this year (US etc) the monthly drawdown numbers have remained around average. Additionally there has been 'talk' that perhaps gas can go lower, and that maybe, even now, you might still be catching the proverbial falling knife. And, this is ignoring the contango considerations.

If you look back a few pages on this thread we discussed options / considerations etc. TT and Sabre are probably your best bet for more accurate info.

turbobob

I'm watching natural gas but personally I wouldn't buy until the trend had turned. Gas futures on the Nymex (which is what backs the NGAS exchange traded commodity I believe) recently hit an all time low. I would guess it has a fair amount of upside potential but for the moment I'll pass.

On the right is a long term (monthly) chart for the natural gas futures. It's clearly in a downtrend on this timeframe. There is a divergence on the stochastic indicator (price makes lower lows, but the stochastic doesn't) which could mean a turning point is near... On a daily timeframe its also in a clear downtrend.

ses6jwg

Was thinking about maybe buying a couple of hundred quid a month in the ISA of NGAS whilst its commission and stamp duty free, then holding long term, as surely over the longer term demand for all sources of energy is going to pick up?

tradetime

Just be aware of the contango that exists in Nat Gas for some considerable time, more than 12 months now. The front month contract in Nymex Nat Gas is trading at $3.87 while the next month contract is $3.93, a 6c difference, this means any ETF comprised of front month contracts is losing 6c everytime they roll the contrracts or roughly 1.55%.

This means that the fund will lose about 18.6% per year just on the roll, or put another way Nat Gas has to increase in price currently by 18.6% per year just for your investment to break even. Supply still far exceeds demand for Nymex Nat Gas, if you can find something that tracks European gas it might be a better bet, (I have not looked at the price of futures for this) but you should also be aware that companies in Europe are currently rushing to explore now using the same technology that has the US awash, and may end up with similar results.

tradetime

My personal view, fwiw, is that Nat Gas is better played through company stocks that operate in the space, STT has been looking at a few, also see my post here re comparison of performance of a basket of stocks in the space verses the Nat Gas tracker UNG. FCG an ETF that tracks a basket of companies primarily in the Nat Gas space.
There may be another way, a recently launched fund from the people who run UNG, they have launched an ETF UNL that buys across the curve, rather than just the front month. This fund by it's design will reduce the bleed experienced due to contango as it only rolls 1/12th of its contracts each month, you can see from this chart that after only 3 months there is an impact when compared to UNG. Essentially it buys time slows the bleed, but in reality if the contango persists, I'm not sure if it provides a solution or not, and if there was ever a flip to backwardation then it would not be a fund structure to own. Nat Gas has always been a very difficult commodity to trade, even for the pro's, see Amaranth Advisors, one of the most spectacular mis-steps with Nat Gas.

sabretoothtigger

Yea its a tricky situation. It could take years to play out.

The base line is they have more gas then needed apparently and speculating that the price may go back up is a dead end because how are you going to store the gas meantime.

Its the opposite of gold even if it is a commodity because I believe they have to throw it away if they have too much, how can that be an investment



Its coming up summer now so it might take until autumn till the danger of this absolute loss declines, they did almost run out of space last autumn and the price reflected that before recovering just before this latest dip


This whole dynamic is slightly familiar of the banks I think, appears to be a bargain but could be really expensive. Eventually sure looks like it could be a money maker, again a bit similar to banks there


Some clever guesses on which companies will come through this best might be needed. In 2008 Barclays, HBOS and Bradford bingley had rights at 280, 275 and 75 and all of them were a 'bargain' price but only one was even close to worth the risk.
I think the main difference to judge was management quality


One company I would like to figure out is http://quotes.nasdaq.com/asp/SummaryQuote.asp?symbol=RGNC&selected=RGNC


As a carrier rather then producer? they may be better placed but maybe chk has good management

Cramer likes CHK and it has upcoming 'JV' or joint ventures. Cramer also liked Bear stearns, have to listen close to that guy to figure what the real message is and since he shouts everything that can be painful



RDSB will be producing more gas then oil by 2012 I think so the boring home grown answer might be staring you in the face really




I switched from INTC to CHK and bought a L&G tech tracker. Near term that isnt looking smart and the above applies. RGNC probably would have been a better choice if any, depending on how well they are able to pay a dividend.


However I considered this whole gas thing last autumn and bought INTC instead, it rose some and CHK fell so I feel more justified personally in progressing from one back to the other now



if anyone can source some sensible advice on this, it might help clarify things http://www.thisismoney.co.uk/investing/article.html?in_article_id=444826&in_page_id=166



Anyway much like the sword of Damocles I dont think this a trade anyone should feel they are missing out on


CHK fell recently on higher volume, support may hold or a bearish price objective might $18
RGNC seems to have volume support at 20, chk also has similar support





http://stocktwits.com/symbol/CHK

tradetime

Yes storage is another important issue, that I forgot to mention, last year there was a real fear that storage capacity was going to run out, an producers would simply dump there supply on the open market at spot, resulting in a total collapse of the price. One also has to be aware that in a situation where a commodity totally collapses, it is possible that an ETF tracker will simply close up shop, and you will be forced to crystallize the loss.