Generator stocks, like Generac (SYM: GNRC) are exploding with the coming winter blast.
In fact, as most of the U.S. gets sets for a nasty winter blast, stocks, such as Generac rocketed from a recent low of about $135 to $175.34.
That’s because managers of electric grids say freezing temperatures, ice, and snow could lead to power outages in many places, leaving millions of us in the dark. “When you get one day of cold weather, it’s not as significant. But we’re talking about three or four days here of very low temperatures,” said Douglas Giuffre, who leads U.S. power and renewables research for S&P Global Energy, as quoted by The New York Times.
Generators can help power your home and keep you warm.
Even natural gas prices are exploding higher as demand rises.
“The biggest gains in natural-gas prices have been for near-term deliveries. Futures for February delivery of the heating and power-generation fuel had their biggest three-day percentage gain on record. Futures settled Thursday at $5.045 per million British thermal units, up from $3.103 at the end of last week,” according to The Wall Street Journal.
Shares of the United States Natural Gas Fund (UNG) ran from about $10 to $14.
While the long-side opportunity was predictable with the size and ferociousness of the storm, so, is the near-term downside.
Once the Storm is Over, Short Natural Gas and Generator Stocks
Once the storm is over, demand for natural gas and generators won’t be as high – which could create a short opportunity in natural gas stocks, like UNG, and generator stocks, like Generac. That’s because the driving catalyst would be over.
In fact, with a good deal of demand priced into generator stocks, like GNRC, we’re already starting to see them break down with the news seemingly baked into the current price.
We can actually see the start of a technical breakdown in GNRC here. Notice just how over-extended RSI, MACD, and Williams’ %R have become. Plus, as we can see at the top of GNRC’s latest trend, it’s already starting to see heavy selling pressure.
Read in Behind the Markets: The real opportunity is closer to home
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Written by Ian Cooper