Enerplus Resources Fund (NYSE:ERF)Q: Any idea why it's traded down so much? i heard some seemingly good advice that natural gas companies like them were a good investment.
A: Natural gas prices have been on the decline in recent weeks, as have been most energy commodities. Natural gas prices which were over $6 earlier this year have fallen to about $3.40 currently. Hence, any stocks that are highly levered to these underlying commodities will trade in concert. We called a Downtrend on ERF on 6/18 at about $21.20 per share, just as it crossed below the 50-day moving average support line. ERF tried to rally back toward its 50 and 200-day moving averages but once it failed to do so, the stock continued its downward momentum. Look for ERF to try and find a base in the $18-19 range where it traded for a while in late March through late April. Longer term, ERF will need higher energy prices which will require more energy demand resulting from increasing economic productivity, colder weather, etc.