The advent of inverse exchange-traded funds (ETFs) can certainly give traders the opportunity to capitalize on a downtrodden asset class. Thus far this year, it’s been traders shorting natural gas who have been the beneficiaries of this reversal of fortune.
However, will the weakness in natural gas be short-lived? Per a FX Empire report, natural gas may be on the move ahead of winter season given the latest technical move.
“Natural gas prices edged higher on Thursday bouncing near support at the 10-day moving average at 2.28,” the article noted. “Resistance is seen near the October highs at 2.38. Short term momentum is positive as the fast stochastic continues to move higher. Additionally, the current reading on the fast stochastic is 59, which is above the upper half of the neutral range. Medium-term momentum as turning and the MACD (moving average convergence divergence) is poised to generate a crossover buy signal. This occurs as the MACD line (the 12-day moving average minus the 26-day moving average) crosses above the MACD signal line (the 9-day moving average of the MACD line).”
Furthermore, traders got another indication of where natural gas may head as the Energy Information Administration “reported that natural gas in storage was 3,519 Bcf as of Friday, October 11, 2019. This represents a net increase of 104 Bcf from the previous week. Expectations according to Estimize was for a 132 Bcf draw. Stocks were 494 Bcf higher than last year at this time and 14 Bcf above the five-year average of 3,505 Bcf. At 3,519 Bcf, total working gas is within the five-year historical range.”
Can this slight bump higher in natural gas be the start of a larger move? In the meantime, here are the 10 best-performing inverse ETFs, which features the top two fund shorting natural gas:
As the best-performing inverse ETF year-to-date, the Direxion Daily Natural Gas Related Bear 3X Shares (NYSEArca: GASX) should continue to appease the short side traders. GASX seeks daily investment results equal to of 300% of the inverse of the daily performance of the ISE-Revere Natural Gas IndexTM, which is designed to take advantage of both event-driven news and long term trends in the natural gas industry.
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