Bookkeeping: Beginning First Natural Gas Play - Cabot Oil & Gas (COG)
I want to build a mini basket of a few natural gas companies, as I've done with fertilizer and coal. We first started noticing the relative strength across this entire sector about a month ago [Feb 11: An Interesting Development in Natural Gas], but I wanted to do more homework on the group as I have not invested in any of these names for close to 3 years. I still like coal more due to its potential to be exported BUT it appears as more coal is sent offshore this has pushed up demand for natural gas. But my main fear of the natural gas trade is slowing US economy will hurt it, and since it is not easily transportable like coal can be, it is levered far more to the domestic situation. That said, the price action in the stocks of late is hard to argue with, so I am going to begin exposure here and then watch how things develop.
Of interest are EOG Resources (EOG), Chesapeake Energy (CHK), Cimarex (XEC), Southwestern Energy (SWN), and a few others. I'll probably stick with 2-3 names and simply have a group of 5-6 on a watch list and am waiting to see which ones hit my price targets first. I do want EOG, with their recent discoveries, in the portfolio badly. Today I am beginning with Cabot Oil & Gas (COG) as it has fallen nicely to its 20 day moving average and is down 9% today. I started with a primer position of 1.2% or 250 shares right near $49. I would like to expand this position if/when the stock falls to its 50 day moving average below $46. We'll see if that happens as these stocks have shown incredible relative strength of late - staying flat in all this market turmoil.
Most of the other names have not fallen that much (ex SWN), but I want to buy the strongest charts WHEN they falter in a general market selloff. Cabot Oil & Gas is one of those names that provided an opportunity today. (could of bought for a similar price in past 2 weeks of course, but wanted to see how this group reacted in the anticipated sell off)
Long Cabot Oil & Gas in fund; no personal position
2 comments:
didn't like what you saw in terms of research on DVN? usually its up there on people's lists with SWN. curious as to your thinking there.
Hi m.h.
XTO, APA, DVN - they all look great. I was going to buy the ETF for the natural gas companies but Marketocracy.com doesnt seem to have it available. There are too many choices, but their charts all look very identical. So I took the one who took the biggest hit yesterday as proxy. Frankly, one could spend weeks just researching one versus the other - which is why I'd prefer a basket approach. I am letting the technicals guide me here and simply looking for the best charts among the myriad players.
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