Natural Gas

Struthers Resource Stock Report (07/06/2009)
"Since entering the Nat Gas ETFs on June 24th, they went back up for a couple days and then last week headed straight down, especially the 2 to 1 leveraged HNU.

Today Nat Gas is $3.50 and on June 24th it was $3.76 so we have seen a decline of $0.26 or 7%. In my June 24th update, I commented that we cannot rule out a drop to $3.50/3.60 so this has happened.

The UNG has gone down $14.11 to $12.49 a drop of 11.5%

The HNU has gone down $5.87 to $4.66 a drop of 20.6%

As I have noted, these ETFs do not always work that well. Gas has dropped 7% in just 6 trading days but the ETFs have dropped a lot farther. I would not be surprised if this was over the course of 4 or 5 weeks, but over 6 days it is too bizarre.

I expect these ETFs to work well over a period of several days to about 3 weeks, as long as you are in between futures expiration months. With Nat Gas there is no July contract, it is now the August futures price we have been looking at so it looked to me that it would be a good period to play these ETFs with no futures expiration for a while.

The June Futures contract month expired the week before we entered our position so there was no expiration of a near month contract that could have affected the ETFs.

Needless to say—I am losing confidence in how these ETFs work and am concerned that investors may be getting scammed in these things somehow.

Perhaps we need some type of stop/loss strategy or only consider these when a trend is in place, not try to pick tops or bottoms?"

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