Natural gas futures have cleared their 200-day moving average and appear to have entered a long-term basing process. Given the potential for a long-term turnaround phase in natural gas prices, we were drawn to the energy sector as a source of potential long-term stock opportunities. The current relief rally in natural gas unfolded after a successful test of long-term support from the 2016 low, near $1.60/MMBtu, and it is associated with positive divergences in long-term indicators like the monthly MACD and stochastic oscillator. This suggests that the current up-move may be the start of a more lasting turnaround. The rally in natural gas has the support of improved intermediate-term momentum, reflected in a recent positive shift in the weekly MACD, which should allow overbought conditions to be absorbed without a major correction in the coming weeks. With the 40-week moving average having been cleared, there is room to resistance from the weekly cloud model (shaded area on the chart), near $3.00/MMBtu. Interestingly, the cloud becomes thinner in July, which theoretically makes a breakout more likely. Secondary resistance for natural gas comes from a Fibonacci retracement level near $3.50/MMBtu. How to play it One of the natural gas-related stocks that sets up well from a technical perspective is Cheniere Energy (LNG) , which is a provider of liquified natural gas. The stock has a weekly MACD ‘buy’ signal near trendline support of approximately $155, and it has room to overbought territory. This supports intermediate-term upside follow-through for LNG toward well-defined resistance from 2022 and 2023, near $182. —Katie Stockton with Will Tamplin Access research from Fairlead Strategies for free here . DISCLOSURES: (None) THE ABOVE CONTENT IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY . THIS CONTENT IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSITUTE FINANCIAL, INVESTMENT, TAX OR LEGAL ADVICE OR A RECOMMENDATION TO BUY ANY SECURITY OR OTHER FINANCIAL ASSET. THE CONTENT IS GENERAL IN NATURE AND DOES NOT REFLECT ANY INDIVIDUAL’S UNIQUE PERSONAL CIRCUMSTANCES. THE ABOVE CONTENT MIGHT NOT BE SUITABLE FOR YOUR PARTICULAR CIRCUMSTANCES. BEFORE MAKING ANY FINANCIAL DECISIONS, YOU SHOULD STRONGLY CONSIDER SEEKING ADVICE FROM YOUR OWN FINANCIAL OR INVESTMENT ADVISOR. Click here for the full disclaimer. Fairlead Strategies Disclaimer: This communication has been prepared by Fairlead Strategies LLC (“Fairlead Strategies”) for…
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