NGAS - Sector: Energy --- Industry: Oil & Gas Operations

[Ramsburg]

Frederick,

Volume wasn't real strong yesterday, but it was another pattern breakout in the right direction.

Yes it was... its a breakout
Volume was not as strong as the last breakout, but it was 2 X the average volume from the last few sessions.

Premarket action...

Yep, NGAS is up more than 2% in the pre market, I'm not sure I like a gap up here, but with all the volatility NGAS is having the gap will most likely be closed intraday.

Update:
Well... finally a breakout from this consolidation zone. NGAS is now gaining momentum again, acting very strong against the market and the Natural Gas Futures.
Also in attach (second chart), the Natural Gas Futures, that are also breaking out.
Let's keep the same plan.

Trading Plan:
Hold NGAS with a stop @ $8.20 and a Limit Sell order @ $10.50

[JKN]

  I've got a print of 300 shares at 10.05 that showed up at 3:46 ET on Scottrade??? Shows up on Marketwatch too.

One of the MM's take advantage of a poor soul on a market order?

[Ramsburg]

  I've got a print of 300 shares at 10.05 that showed up at 3:46 ET on Scottrade??? Shows up on Marketwatch too.

One of the MM's take advantage of a poor soul on a market order?

Hi JKN,

I'm not sure what was that, but probably just a «bug»
Anyway, NGAS did great today !

[Ramsburg]

Update:
NGAS did well last Friday, reaching new relative highs with high volume. But today we are about to see a gap down and some selling pressure (NGAS is down pre market), mainly because of Ernesto hurricane, and short term speculation about it (Ernesto was downgraded and will probably not affect the Gulf of Mexico as some short term traders were expecting).
We believe this is not much relevant for the main setup here, and we expect NGAS to hold above its new ascending support ($9) after this short term «noise».

Trading Plan:
Hold NGAS with a stop @ $8.20 and a Limit Sell order @ $10.50

[Ramsburg]

Update:
NGAS opened with a big Gap down today and suffered a strong sell off during the first minutes of trading. During the rest of the session NGAS recovered and closed steadily above $9.00.
Despite this ugly candle, the abandoned baby setup and the fall down in Natural Gas futures, this all seems to be another take of price noise caused by irrelevant news to the stock (Hurricane Ernesto), the bullish technical setup is still present on the chart, and we have no reasons to drop this position. We expect NGAS to continue to trade above the initial breakout level and to break into new highs, volatility should stay high.

Trading Plan:
Hold NGAS with a stop @ $8.20 and a Limit Sell order @ $10.50

Regards,

[Ramsburg]

Update:
NGAS shares are experiencing difficult days, the Natural Gas futures went down a lot, and some insiders are selling stock recently. With that said I'm wondering why didn't we get stopped yet and why is still NGAS above the breakout zone?
Technically speaking, NGAS is showing a lot of relative strength against an aggressive environment for the stock. I'm not expecting the Natural Gas futures to drop much more, and I can't see a worst scenario coming in, so we'll keep the same plan here.

Trading Plan:
Hold NGAS with a stop @ $8.20 and a Limit Sell order @ $10.50

Regards,

[Ramsburg]

Update:
We're still apprehensive about this position, NGAS price development  has not occur as we planned, especially because of a big sell off on the Natural Gas futures.
We bought NGAS on August 1st, and Natural Gas futures dropped from 8.60 back then to 5.91 right now, meanwhile NGAS was able to hold above its support (the breakout level at 8.60) and not to perform new short term lows, showing a lot of relative strength. This is the main reason why we are still holding this position, as we think NGAS has full potential to move higher and its showing a lot of strength, but is being limited by a bad performance in Natural Gas futures.

Trading Plan:
Hold NGAS with a stop @ $8.20 and a Limit Sell order @ $10.50

Regards,

[422fwhp]

Took the stop out...

[Ramsburg]

Position closed @ $8.20 (following the trading plan)

[JKN]

Out at $8.23...

[setravis]

Double Bottom (continuation) Pattern.....Stochastic rising out of oversold,
MACD positive, some resistance met today at the 200 MA line.
Note: Natural gas heats over 90% of homes and businesses in the Chicago and southern Wisconsin areas alone.......


Technicals
Last Price Quote is:
6.91%above 13-day MA
9.56%above 50-day MA
RS Rating: 87 

Fundamentals
Key Data:
Market Cap (M): $147.31 
P/E Ratio: 74.85 
PEG Ratio: N/A 
Next Earnings: 05/08/2007
Last Analyst Rating: Strong Buy


Double Bottom (Reversal) Pattern

The double bottom is a major reversal pattern that forms after an extended downtrend. As its name implies, the pattern is made up of two consecutive troughs that are roughly equal, with a moderate peak in-between.

Although there can be variations, the classic double bottom usually marks an intermediate or long-term change in trend. Many potential double bottoms can form along the way down, but until key resistance is broken, a reversal cannot be confirmed.

It is important to remember that the double bottom is an intermediate to long-term reversal pattern that will not form in a few days. Even though formation in a few weeks is possible, it is preferable to have at least 4 weeks between lows. Bottoms usually take longer than tops to form and patience can often be a virtue. Give the pattern time to develop and look for the proper clues. The advance off of the first trough should be 10-20%. The second trough should form a low within 3% of the previous low and volume on the ensuing advance should increase. Volume indicators such as Chaikin Money Flow, OBV and Accumulation/Distribution can be used to look for signs of buying pressure. Just as with the double top, it is paramount to wait for the resistance breakout. The formation is not complete until the previous reaction high is taken out.

[setravis]

"NGAS" Threads have been Merged.
Please use the search before starting new threads on a Stock Pick.
Chances are a thread already exist.
So why not post whatever you have to comment about on that pick to that thread.
"Simplicity" My fellow traders.                                           
All history on a stock pick in 1 thread is awesome.                                        
Just trying to get threads together,so we don't have a numerous amount floating around on the same stock.                      
Thank You....and good luck with all your trades....make some $$$       

[David Randolph]

Fundamental Case:

I used to have two stocks related to $NATGAS, but GW was sold with a profit as planned. When I added SD to the TM Portfolio, if you recall, I was in doubt between SD and NGAS, but finally opted for the largest company.

SD wasn't a bad bet, since it is up 7.1%, but NGAS was up a bit more, 11.3% over the same period.

As you know, $NATGAS is in a bullish mode:



But, besides this obviously positive catalyst for NGAS, there's another:



Action
NGAS Resources is now producing gas from three horizontal wells in eastern Kentucky, and has just commenced drilling the 5 th well in its 6 well horizontal program. The first well has been on-line since April 2nd, with production ranging between 350-420 Mcfd, in-line with our pre-drill expectations and supporting our thesis that horizontal drilling could add up to $5.50 per share of upside, or more than double current NAV.

Key Points

• NGAS is rapidly drilling and completing its initial tranche of 6 horizontal
wells in the Leatherwood area of eastern Kentucky. The company began drilling
the 5th well in the program on April 25th and expects to have all six drilled and
stimulated by mid-May. The first well has been on-line for more than three weeks,
the second and third wells have been producing for a week to 10 days, and
stimulation operations on the fourth well is set to begin this week.

• The initial well has been producing in the range of 350-420 Mcfd since early
April, which is in-line with pre-drill expectations, which were modeled on a
Equitable type horizontal well with an average initial 30 day rate of 400 Mcfd
generating 1 Bcf reserves. As we noted in our initial report, using fairly
conservative assumptions, NGAS horizontal drilling upside is significant,
including 170 Bcf of net reserve potential and $5.50/share of asset value
upside in a company with only 105 Bcf of proved reserves and $5/share of NAV.

• Implications: Positive, particularly given the rates seen on the first well, and the
company is well along the way to finishing its six well program in May. The next
news is anticipated at the May 8th conference call, followed by an analyst meeting
in the field a few weeks later. We reiterate our Buy rating.

Valuation

Investors need to remain focused on the horizontal upside, which we calculate
at roughly $5.50 per share, assuming that less than half of the Leatherwood area is
drillable. Our $10.50 price target is based on asset build-up, which includes not only
the horizontal upside but also $5 per share of YE07 NAV (proved reserves valued
at $7.50 gas, less debt plus midstream assets).

Risks

Risks include: 1) the outcome of NGAS' horizontal shale drilling program in eastern
Kentucky 2) significant declines in oil or natural gas prices and 3) delays or
production problems at major projects

Company Description

NGAS Resources, Inc, headquartered in Lexington, Kentucky is a small independent E&P company focused on unconventional natural gas basins in the eastern United States, mainly Appalachia, that support repeatable drilling in multi-pay reservoirs. NGAS proved reserves totaled 105 Bcfe as of year-end 2007 of which approximately 46% were proved developed. The company's reserves are primarily natural gas and located in the southern portion of the Appalachian basin, one of the oldest and most prolific US natural gas producing areas. NGAS' positions includes its core Leatherwood asset, its interests in the Arkoma - CDX coalbed methane project and its Stone Mountain (SME) fields, Amvest and Martins Fork.

Technical Case:





NGAS has been very volatile, but the trend is positive now. I think one can place a relatively safe buy around current levels, aiming for $10 plus (given the fundamental outlook) and with a stop on close below the $6.39 support level.

Trading Plan:

Buy NGAS around the open. Take profits at $10. Sell with a small loss if the stock is set to close below $6.39.

[David Randolph]

NGAS fell 2.9% yesterday due to $NATGAS 4.3% drop.

However, another analyst came out with a $11 price target (full report attached below), due to new explorations and higher $NATGAS prices (the $11 NAV and price target was still calculated using $WTIC at $86.7 and $NATGAS at $9.78 and they're considerably higher now).

Hmm, I guess my stop loss is too tight, given the stock is technically overbought (whatever that means), so I'll adjust a bit, using the ascending 50 days SMA as a trigger instead of the $6.39 horizontal support.

Trading plan for NGAS:

Take profits at $10. Sell with a small loss if the stock is set to close below $5.95.

[David Randolph]

Trading plan for NGAS:

Take profits at $10. Sell with a small loss if the stock is set to close below $5.96.