Buying more FCG on President Trump


A year ago I predicted a rally in natural gas stocks. I was early. This morning, it looks like I’m right on time.

President-elect Donald Trump ran on a platform of supporting fossil fuels. America’s best fossil fuel resource is natural gas. It’s cleaner than coal, similarly priced and abundant.

We should expect a major rally in natural gas in coming years. The industry is likely to receive significant fiscal support as enough Democrats in the Senate are likely to agree to compromises on energy policy involving natural gas.

 

I also expect that President Trump appoints friendly Department of Justice and Environmental Protection Agency personnel.

In addition to supportive domestic policy for natural gas, OPEC has been attempting to stabilize oil prices. Oil prices and natural gas prices move largely in tandem. As deep water oil production declines in the next 2-3 years, oil will and natural gas prices will rise naturally.

If OPEC is successful in instituting production caps, the prices of oil and gas will rise by summer 2017.

The easy buy for intermediate term investors is the First Trust ISE-Revere Natural Gas ETF (s:FCG). The ETF is still down over 75% from its 2014 high.

In addition, the index the fund tracks has been largely reconstituted with healthy companies as the bankrupt firms were jettisoned.Look at the base that FCG has been putting in this year. The consolidation pattern has been trending slightly higher and in a narrower path. It is set to breakout. When that breakout occurs, it could sky much higher.

Buying FCG

FCG chart