Another week of trading is in the books, and we find the Natural Gas Continuous contract (NG.F) up another 6.49% as of yesterday's close, with another couple of percent added to that number in today's action. This puts the 1-year performance at 106.14%, making it the second-best performing commodity, below Coffee futures, which are up 132%. Given the explosive move in the underlying commodity, we thought it is important to scan the markets again for more ideas in the natural gas space for advisors to consider. In doing so, we combed through hundreds of SIA reports created daily with the advanced SIA platform, which continuously monitors and ranks stocks based on relative strength through a dynamic, head-to-head ranking system, ensuring that top-performing stocks are consistently identified. Big data analytical software programs like SIACharts can process and analyze data at a rapid and tireless rate, while the human brain typically learns from dozens to hundreds of experiences per day. Armed with some breadcrumbs at a sector level, the analysis was enhanced with the power of machine learning analytics. After a few movements and re-sorts of the data for energy names, we were given a very short list of names to review. Here, we discovered another outperforming company, Williams Companies Inc. (WMB), an American energy company based in Tulsa, Oklahoma. Its core business is natural gas processing and transportation, with additional petroleum and electricity generation assets. A Fortune 500 company, its common stock is a component of the S&P 500 and is a part of the SIA S&P 500 Index Report, which ranks the names by relative strength. Outperforming names might reflect the underlying strength perceived and voted on by buyers and sellers of the stock, both inside and outside the industry. For those who believe in efficient markets and the power of statistics (if you don't, please see me after class), this relative performance shouldn't be ignored and is the result of millions of expressions that, as an aggregate, might be significant and worth noting. This expression of growing strength, as represented by the battle between buyers and sellers, may have started in late April 2024 when shares of WMB moved into the favored zone of the SIA S&P 500 Index report, which is visualized in the attached SIA matrix position chart above. Since then, shares of Williams Companies have continued to rally higher within this powerful report, where it is currently positioned at #43. To contextualize this rally, we highlight the point-and-figure PNF chart of Natural Gas (NAT.GAS), where we can see two important technical attributes. The first is the reversal of trend in mid to late 2024 and the corresponding run-up to current levels (see green arrow). The second is the forming price discovery triangle that we have established with the two black lines. A price discovery triangle in point-and-figure charts is a pattern that forms as prices contract. The X-Columns (up) form successive lower highs, while the O-Columns (down) form successive higher lows. This contracting range reflects a standoff between buying pressure and selling pressure. Price discovery is the process where buyers and sellers agree on a price, and at some point, a conclusion occurs, and the move continues in one direction or the other. Natural Gas may currently be in this price discovery battle, with bulls and bears locked in a head-to-head duel for supremacy. However, it's important to note that many seasoned point-and-figure technicians believe that these PNF triangles often resolve in the direction of the major trend, which in this case is positiveāmeaning up. But without supporting data today, we will call that speculation. Having presented support and resistance on the Nat Gas chart many times, we are leaving them out today in favor of highlighting the forming triangle. We'll call support and resistance after the duel is complete, although the close of $3.73 appears to have completed it to the upside. Let's let the dust settle and take another look on Tuesday after the market holiday, once trading begins again next week.
Turning back to the point-and-figure chart of Williams Companies Inc. (WMB), we find an explosive chart that has moved higher and higher without waiting for any resolution of the tug-of-war discussed above. Here, we find WMB completing several PNF double tops, where resistance is now at $59.97 and further up at $68.89, while support is at $51.19 and further support at $43.69. Meanwhile, WMB carries an SMAX score of 8 out of the best possible score of 10, which further supports its relative outperformance compared to other asset classes like cash, bonds, commodities, currencies, and other alternative equity indexes. One last piece of analytics we can glean from the computer is that while the Energy sector is still in the unfavored zone of the SIA Sector Report, WMB is one of the standouts, possibly bucking the trends and performance of its other constituents that may be more oil-oriented in nature and not so natural gas-focused.
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