FCG: Negative Alpha Ahead In Natural Gas (Archive)
Bearish multi-factor thesis on FCG, with weakening fundamentals, volumes, and technicals.
This 5-Minute Pitch was originally published on Seeking Alpha before the launch of the Hunting Alphas website. It is shared here to showcase my previous work and track record. New 5-Minute Pitches published on this site will not be disseminated anywhere else.
Elevator Pitch
- Powell talked about inflation peaking out, particularly in the goods sector due to normalization of supply chains in the latest FOMC meeting.
- This gives rise to my bearish view on the natural gas industry, which can be played via the FCG ETF.
- Leading indicators point towards continued slowdown in industrial activity, which makes up more than 60% of natural gas usage.
- There is an evaporation of pricing tailwinds as Europe is expected to de-risk further from natural gas dependency.
- Technical analysis also points towards downward pressure in FCG, especially relative to the S&P 500, suggesting negative alpha.
Read the full article here.
Disclosures and Disclaimers
Past performance ≠ future results. Not investment advice. See full Disclaimer.
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