Larry,
I would like to get your opinion or anyone else who would like to comment. I was thinking that natural gas stocks have huge upside potential right now. The commercials are starting to build a long position again and natural gas is slightly below the 200 DMA. I also think the intensity of selling was overdone and a strong rally could follow. I believe now might be a good time to lighten my positions in oil service a little and move some of the capital to natural gas. Several gas stocks are showing pretty firm support even though natural gas has been going down pretty steadily. I have a feeling that all we need is a cold spell and natural gas could take off again.

Jim

Jim,

I agree that natural gas stocks are going higher, but I sure wish there was some place other than oil services to get the money to buy them. What stocks do you have in mind?

Larry

Larry,
I can assure you I'm not selling my oil services stocks just lightening up a bit. They've had a great run so far and it may be time for them to slow down or trade sideways for a while. Anyway I was looking at DVN, CHK & ECA in that order. All three have pretty clear support right under their current level (obvious stop loss). So unless natural gas takes another big dive I don't see much downside risk but alot of upside potential. Do these choices seem sound to you or would you be leaning toward something else that I may have overlooked?

Jim

They all three have a good return on capital (just eye-balling the statements). DVN is the cheapest. In fact, it's dirt cheap. Also, it has the highest relative strength. So DVN would be my favorite of the three. I don't see much point in buying all of them.

Larry