LNG Cheniere Energy (AMEX) North America Liquid Natural Gas Gateway

by Olivier on December 3, 2010

It sure looks like Natural Gas might be staging a great comeback. LNG – Cheniere Energy (AMEX) is my most recent portfolio addition. In my latest Silver price update I mentioned that I was getting more bullish on Natural Gas. So today’s buy really shouldn’t come as a surprise. If you look at the stocks listed in my Nat Gas sector overview chart LNG – Cheniere Energy clearly stands out. It is the strongest looking chart of all:

The recent thrusting move on the daily chart is nothing short of impressive. That’s both price wise and volume wise. The stock is now in the process of building a very bullish flag testing long-term support.

LNG Cheniere Energy AMEX Liquid Natural Gas Bullish Flag Technical Analysis Price Target Chart Pattern

Up-to-date LNG – Cheniere Energy chart on my public list.

What makes me even more bullish though, is the long term weekly chart. The support level LNG is testing right now is derived from obvious price pivots created a long time ago. The 5 – 5.50 price area also happens to be the upper price range of the gigantic cup and handle pattern the stock broke out of recently.

LNG Cheniere Energy AMEX Liquid Natural Gas Bullish Flag Technical Analysis Price Target Weekly Chart Pattern

The weekly chart is not part of my public list. Click on the above chart to maximize it. You will then notice the rectangles, price zones I labeled as ‘air pockets’. These are price areas where price either appreciated very fast or declined precipitously in the past. As history tends to repeat, odds are extremely high price will repeat past behavior once it enters that zone again.

We are not there yet. But the bullish basing pattern that has developed over several years makes a 10 USD$ price target look like a reasonable expectation. We saw a thrusting move on huge volume. Now the stock is consolidating on decreasing volume and decreasing volatility. In accordance with one of the most reliable technical analysis patterns, I would assume an A-B-C pattern to be in the making. That simply means once the consolidation ends, the direction of the trend leading into the consolidation pattern should resume. I expect another thrusting move on increasing volume taking the stock to 10$. If that happens we will hit that ‘air pocket’ area. If price then repeats past behaviour that’s where the big money will be made.

The beauty of LNG lies in the fact we are dealing with an infrastructure play in the Natural Gas sector. Their North American LNG (Liquid Natural Gas) Gateway is somewhat of a picks and shovel approach to the Natural Gas industry. The fact Natural Gas is probably the most hated commodity right now only makes me more bullish. You know the story. The exact opposite of a crowded trade. No greed. I waited for price confirmation and now I am buying the first deep pullback of what I perceive has the potential for a huge run to the upside. The charts are my guide. I simply do what they tell me to do.

www.cheniere.com: Cheniere Energy, Inc. (NYSE Amex Equities: LNG), a Delaware corporation, is a Houston-based energy company primarily engaged in LNG-related businesses. We own and operate the Sabine Pass LNG receiving terminal in Louisiana through our 90.6% ownership interest in and management agreements with Cheniere Energy Partners, L.P. (NYSE Amex Equities: CQP), which is a publicly traded partnership we created in 2007. We also own and operate the Creole Trail Pipeline, which interconnects the Sabine Pass LNG receiving terminal with downstream markets. One of our subsidiaries, Cheniere Marketing, LLC, is marketing LNG and natural gas and is developing a portfolio of contracts to monetize capacity at the Sabine Pass LNG receiving terminal and the Creole Trail Pipeline. We are also in various stages of developing other LNG receiving terminal and pipeline related projects, which, among other things, will require acceptable commercial arrangements before we make a final investment decision. In addition to safely maintaining the operations of the Sabine Pass LNG receiving terminal and Creole Trail Pipeline, our primary business strategy is to monetize the 2.0 Bcf/d of regasification capacity at the Sabine Pass LNG receiving terminal held by Cheniere Marketing by entering into long-term TUAs, developing a portfolio of long-term, short-term and spot LNG purchase agreements, and entering into business relationships for the domestic marketing of natural gas that is imported by Cheniere Marketing as LNG to the Sabine Pass LNG receiving terminal. Our strategy would also be achieved by entering into long-term customer contracts in connection with the liquefaction project that is being developed by Cheniere Partners as the capacity fee under such contracts would include services for both liquefaction and regasification.

Don’t confuse brains with a bull market. – Humphrey B. Neill

My public list with all my charts can be viewed here:

Buenas noches!

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