One of the things that were impressed on me early in my career in the forex market was that the market can never be wrong. The market price is simply an expression of the place at which a buyer and a seller were last prepared to transact, so of course logically that is the case. Sometimes, though, when the general sentiment is negative, things get dragged down to the point where logic dictates that there is far more chance of a recovery than of further losses. That doesn’t mean that it cannot go lower, just that the odds work in favor of a buyer.
Take Golar Liquid Natural Gas (GLNG), for example.
(Click to enlarge)
The selling of natural gas futures, and therefore anything associated with the commodity, has, over the last few days, begun to look like full on panic. Yesterday, for example, the gains that resulted from news of larger than expected draw downs of gas were quickly erased and futures finished the day down once again. When even good news is shrugged off like that it is a sign that the market is acting somewhat irrationally.
That is definitely the case with a couple of associated stocks, and GLNG is the prime example. Firstly it should be noted that, in many ways, GLNG is, despite the ticker, not a natural gas stock. It is a transporter of the product.
No doubt the company’s stated aim of becoming an integrated mid-stream player in the industry has hurt it as prices have collapsed, but with the export of U.S. natural…