It has been a deeply weird year in energy prices. Whether it's crude oil's collapse in May or natural gas making historic lows in April only to shoot more than 60% higher in the next three months, it's been almost impossible to keep track of the action.
In the attached clip, Elliott Wave International's Jeff Kennedy reveals what the charts are telling him about what's next in crude and natural gas and how investors can position themselves to make money.
Using NYMEX as his benchmark, Kennedy says black gold is going sideways. The range, as he sees it, is between a high of $110 to $115 a barrel and a low of $80 to $75. The real headline is Kennedy's view that crude's move from $32.40 in December of 2008 to today has been nothing but a bear market rally. He's on the sidelines now but if and when crude breaks below $75, Kennedy thinks it's going back below those 2008 levels.
His equity play off the crude drop is shorting Exxon Mobil (XOM), the integrated monster riding crude's rally straight into resistance. Another name with a "counter-trend corrective rally" coming to an end in Kennedy's mind is Chesapeake Energy (CHK).
Once they start rolling over, Kennedy would look to short XOM or CHK.
Kennedy says he loves natural gas and its ETF -- the United States Natural Gas Fund (UNG), with a rather significant catch. "I'm looking for UNG to get down to about $12 a share and natural gas to $1.85 - $1.75," he says. Those prices are more than 25% lower than where nat gas and the UNG are trading at the moment.
For those who can wait, Kennedy sees those lows coming in the next few months. Right about the time you'll be stuffing your turkey, you'll be able to stuff your portfolios with natural gas and UNG, by his estimation.
- Nature & Environment
- natural gas