Lately all the Fast Money traders can talk about is nat gas and the sharp gains it’s made over the past month. Now what?
According to top energy pro Joe Terranova, the chief market strategist for Virtus, the trade is about to – well – run out of gas. “The big reason behind the rally was the hot weather gripping the nation,” he says. In other words, Terranova sees it as a play on increased demand for air conditioning.
But now we've turned the calendar and it's August.
“In only a few weeks the very hot weather will be nothing more than a memory."
Therefore, Terranova thinks if you’re long, it’s time to pare back positions.
OptionMonster Jon Najarian agrees. He also says at current levels the most likely move is lower. “I’m looking for the spot price to pull back below $3.”
Top trader Jeff Kilburg says the same. “I expect nat gas to settle back down to $2.50 or $2.60.” Kilburg also says if you agree with the thesis, play the UNG which tracks the spot price. "It should go lower," he explains.
Or, if you’re looking for a long trade, Guy Adami, who is managing director of stockMONSTER.com, says on a pullback, he’s a buyer of Apache. “It’s been trading between $80 and $100,” and he says there’s no reason for the stock to break trend.