More on natural gas

Take a look at this chart. This is chart of the crude oil / natural gas (NG) ratio. Whenever the ratio gets near 14-15, natural gas outperforms oil. Whenever the ratio gets below 7, oil outperforms natural gas.


We recently registered over 15 two weeks ago, at 15.41. This signals that natural gas will outperform oil on a relative and likely absolute basis.



Let's take a look at the other inflection points:

15.75 in Sept 06 to 6.78 in Nov 06: Oil ~0%, NG +105%: NG REL/ABS OUTPERFORM
6.78 in Nov 06 to 15.92 in Aug 08: Oil +146%, NG +54%: OIL REL/ABS OUTPERFORM
15.92 in Aug 08 to 6.01 in Dec 08: Oil -72%, NG -52%: NG REL OUTPERFORM
6.01 in Dec 08 to 15.41 in Apr 09: Oil +35%, NG -46%: OIL REL/ABS OUTPERFORM
15.41 in Apr 09: NG will outperform on a relative and likely absolute basis

The play? I like being straight long Natural Gas (UNG). If you want to be hedged, short crude (USO).

In TBT

bond yields are skyrocketing.... they are "breaking out". This is what we've been looking for. The real breakout. I took a small position, 1 lot, in TBT at 52.11.

On a day that the Dow is currently down 1.5% and bond yields are up 2.5%, that is rather amazing. This might finally be "it" for the bond market to start the long trend back up in yields.

Short Capital One (COF) at $27

I cannot believe Capital One is up over 20% today and is now up almost 400% from 2 months ago when credit card debt is the next shoe to drop (along with commercial real estate).

This was a $7 stock and I believe that is a fair price for it! Couldnt stop myself from shorting it today (with June puts)

The FAZ nightmare is over

Never will I use these 3X instruments again. 50% loss.

The dollar is the key

The dollar is testing its trendline, and as you can see in the chart, there is a support "bottom" at 83.

Should we break significantly under this 83 level, say 82 or 81, that should be the green light for equities and commodities to power higher. I will cover all my shorts and go full long on commodities in this instance.

If the 83 level holds and we move higher, as we could be forming a "W" and move to 89 on the dollar, I would expect a major market selloff.

I'm calling the bottom in nat gas...

...and thus, I bought some UNG @ $14.2o this morning

Interesting Weekend Reading at Barron's

Unions Prevail over Wall Street in Chrysler Deal -- P33; Obama is paying back his UAW masters

Sizing up the Swine Flu -- P34; "...like the 1918 virus, the swine flu, with a similar genetic lineage, emerged at the tail end of the flu season.  As in 1918, there was only a blip of [initial] fatal cases.  But in 1918, mutations of the original strain resulted in a subsequent surge of deaths."  Who's to say it won't happen again?

Casual Dining Stocks: Overcooked? -- p22; two good short ideas, CAKE (Cheesecake Factory) & PFCB (P.F. Chang's).

The Other Shoe -- p19; Why everyone needs to short real estate, still. ;)  Use SRS if you dare.