Waiting for natural gas to go up has been a little like waiting for Godot.
But if you look at the leading natural gas company, Chesapeake Energy, (CHK) you will discover that it is in a bull market — and has been for months…
Yesterday, The Wall Street Journal painted the picture that the nuclear problems in Japan were responsible for the rise in alternative fuels, such as coal and natural gas.
At the same time, companies like blue chip uranium producer Cameco (NYSE: CCJ) have been taken to the woodshed and beaten soundly.
This is too simplistic an argument.
It is true that companies like Arch Coal (NYSE: ACI) bounced off their recent lows…
But the share price of coal and natural gas companies have been going up for months now, driven by emerging market demand and a falling dollar.
As you can see on the Arch Coal chart, the share price has been consolidating.
That said, the nuclear problems in Japan have given it the boost that it needs to break out.
I’m betting it will hit a new high next week.
Last week, I told you to go to cash as we were headed for a crash. I wrote that one of these Tuesdays, the Dow would open up down 600 points.
I apologize… The market only opened down 200 points on Tuesday.
Here is the NASDAQ rolling over:
It’s not a buy yet, though it has given up all of its gains for the year. It looks like we have to build some support around 2,535.
Still, I feel a lot better about putting some money to work than I have in three months.
At least we know that the market can correct.
Check out the Japanese yen.
Japan suffered a triple nightmare of earthquake, tsunami, and nuclear meltdown… and the country’s currency took off.
It makes no sense — until you realize the Japanese are selling their foreign assets and bringing the money home.
This means, of course, that the dollar will continue to go down and the price of most commodities like oil, natural gas, and coal will continue to go up.
Blood in the Streets
If you are looking for a few solid “blood in the streets” plays, look no further than Entergy (NYSE: ETR) and Exelon (NYSE: EXC).
Both are down about 10% this week.
These are big, U.S.-based utilities that pay 4.7%, and 4.9% in dividends, respectively.
Usually in times of trouble, investors flock to the safety of dividend paying utilities. This time, however, they don’t want to own any company that has a nuclear power plant…
If you are looking to own utilities, now is the time to buy.
There is a good chance the U.S. won’t build anymore nuclear power plants, but the No Nuke types don’t have the political power to shut down any that are now running.
This is a perfect opportunity to own defensive stocks at a discount.
Happy St. Patrick’s Day,
Editor, Energy & Capital