How To Profit From The Polar Vortex

To profit from the short-term openings the market hands you, it takes the right strategy.

That's a lesson I had to learn after correctly predicting that the U.S. would be in for a remarkably cold winter. Though temperatures in much of the U.S. have fallen to the lowest levels in years, the stock picks I suggested simply didn't have enough leverage to weather as I anticipated. As I noted in late December, those picks rose only modestly as winter dug in, even as natural gas-focused exchange-traded funds (ETFs) fared a lot better.

The explanation is straightforward. As I noted last month, "Many energy traders don't trust quick moves in energy prices, and they assume that profit-taking will soon ensue. If gas prices move back below $4 per thousand cubic feet (Mcf), then these companies will generate a lesser benefit."

Since then, natural gas prices have kept surging, and these stocks still haven't budged much.

Yet a change in the weather provides a shot at redemption. Those rapidly surging ETFs appear set to reverse course, and you can even invest in this strategy without initiating a short sale. Continue reading "How To Profit From The Polar Vortex"