Saturday, August 2, 2008

Added some natural gas companies

While the market in general held up pretty well, I decided to play long not only on general market (via financials UYG), but also added fertilizer companies and then two natural gas companies in XTO and NBL.
  1. I think oil is down fast and big enough, it's possible there will be a bounce in oil. And if that's the case, some oversold energy stocks like XTO and NBL will have a decent bounce. Therefore, I started to add these two.
  2. Overall, I will not play oil directly, I think it's overbought for the long term. And natural gas is about half expensive as oil, therefore, it's more attractive than oil, just like coal. And natural gas is cleaner than coal. XTO, APA, CHK, DVN, APC are some of the leaders in natural gas. I chose XTO and NBL, because they are smaller than APA, and DVN, therefore, it's a possibility that big oil, like XOM and BP, will acquire these companies since they're running out of oil. Just a thought.
  3. I also bought oversold MOS and AGU, three days ago they are up almost 6% above the price I bought, now they're almost back to where I bought them. I believe agriculture is still in a bull market long term, therefore I should hold these.
  4. UYG showed some strength the last two trading days, outperformed market, which is rare the last few months. Since it's way oversold long term, reverse to mean, it may outperform the market the next few months, until the next shoe drop, of course.
  5. Another area, which I watched for a few years, is biotech finally showed some strength. I may need to use IBB to get exposure in that area.
  6. So still, commodities are my main focus, in that space, fertilizer, natural gas, coal are some areas indirectly benefit from the commodities bull cycle. I don't believe the weak dollar story is over. Oil may only take a break in a long term up trend, but I believe other energy will do better than oil, like natural gas, coal, wind and solar.

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