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Two Ways: Cliff Ahead for Nat Gas


Strengthen your portfolio in good times and bad.

Nat Gas Cliff Ahead

Natural gas production in the U.S. will likely continue growing through the first quarter of 2009 as companies finish their budgeted projects from the previous year. But then it could be in for a big decline. The reasoning? Just as you don't start production overnight, you don't stop it as well. That's according to John Richels, president of Devon Energy (DVN).

The Financial Times reports Richels expects production decline to begin in the second quarter of 2009 from record-setting paces in 2007 and 2008 (4.3% and 6% respectively) and continue on into the 2010. As context, the increase in nat gas production in 2006 was just 2.3%. For more, See Professor James Anderson's Natural Gas: The Real Alternative.

From the Bull Pen: For a natural gas play, watch the behavior of Petrohawk Energy (HK) near $20. A sell stop can be set below recent lows (near $19.50).

From the Bear Cave: Bears can look to the nat gas ETF (UNG). One option may be starting an initial position here with a buy stop near $18.50 -$19.00.

Quick Check Around the World

Asian trading closed with the Hang Seng -3.79%, Nikkei -1.35%, Sensex -2.91%, Taiwan -2.17% and Shanghai -2.93%.

Glancing towards Europe, we see the CAC -2.09%, DAX -2.29%, FTSE -2.04%

As of 8:05 a.m. EST, S&P futures are trading -15 to 806.00, and Nasdaq futures are -25 to 1205.00.

A Look At Commodities

Crude oil is trading -0.70 to 36.81. Gold is +23.4 to 965.80. Silver is +0.27 to 13.890, and copper -6.25 to 147.60.

The dollar index is +0.7550 to 87.7150.

On the Radar


08:30 Empire Manufacturing -24.00
09:00 Net Long-term TIC flows
09:00 Total Long-net TIC flows
01:00 NAHB Housing Market Index 8

Click here for the full trading radar.

It should be another crazy week as expiration Friday looms ahead. Good luck, Minyans.
No positions in stocks mentioned.

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