Out Fox The $treet

Just getting around to posting that Stone Fox bought KHD Humboldt Wedag (KHD) for the Growth Portfolio at $10.35 on 10/13. More to come on this play, but to summarize its a great value play in the Engineering & Construction segment with a huge focus on emerging markets like India. Sold the Natural Gas ETF (UNG) to make room for this trade. Not much positive to say about this ETF. Just read any of the stories on popular financial websites to see why this ETF has turned out to be a huge bust.

CNBC has a little article on this ratio going back nearly 20 years. The ratio historically averages in the 6-8 range and anything outside that range suggests that one commodity has moved to much or the other is lagging. When ratio hits a 20 year high its something to take note of. Basically the use of oil is now so much more then natural gas that anybody possibly able to switch will whether using compressed natural gas in vehicles or such which in turn helps rebalance the price ratio. It's important to note that the crossover of use is very limited. Natural Gas is a domestic fuel not widely transported beyond the borders of the US. Any pickup in demand will have to come from the US and the growth in compressed natural gas being delivered to the US has increased the worry that pressure will exist on prices. Oil on the other is a global product where the prices are determined by the demand in China and Europe and the US. Supply can also be more impacted by political issues in OPEC o...

After what appeared to be a very bearish Nat Gas inventory report this morning, Nat Gas (UNG) plunged. Notice though that it hit right around the recent lows and rallied hard. This huge reversal is usually a bullish signal that the shorts are out of ammo. It signals the all clear sign for longs and provides a nice tidy point for a stop loss. Notice the highest volume for the month on this ETF as well. Unfortunately we bought shares in the Growth and Hedged Growth funds yesterday instead of today. Even with the wild price swings our funds are up 2% on this position. Glad we didn't spend much time viewing them in the morning (down 10% might have depressed us).

Quick update: Bought Gafisa (GFA) on the dip to $16.08 just around the 200EMA. See post on seekingalpha.com for more detials. Added to Growth Fund. Bought United States Natural Gas (UNG) just above $14 on the 10% pullback today. The disconnect between oil and natural gas is very high. If the economy is in fact going to recover, then UNG is the better play at these levels. Huge cutback in drilling combined with more industrial use could squeeze the prices higher. Added to both ther Growth and Hedged Growth Funds.