I was obseeving today that the prince of natural gas went up more than 4% and also noticed that PNG, a natural gas stock was down aroumd 3.75%. my question is: if a stock price bariation diverges greatly from its related commodity price variation, does it mean that something bad is probably going on in said company and we can expect prices to probably go even lower?

Thanks for your input!

I don't think that there is necessarily something wrong with the underlying security.

Keep in mind that the vast majority of stocks trade in the direction or trend of the overall market (70-80%).  Today the market traded lower.  I think you also need to take into account volume, or strength of the move.  Really study the price action.

As an example, gold has been relatively stable in the $1500-$1600 per troy ounce over the last few months, but the gold miners have been beaten down and down.  They are trading extremely cheap relative to the actualy price of gold. It didn't really make sense, but that is an annomaly of sorts and it happens quite often. It doesn't mean that there is something wrong at all.  Just be careful when doing your due diligence though.

On a side note, I own Westport Innovations at around $23/share. They make natural gas engines.  I hope and pray that the price of natural gas continues to stay low, so that companies can develop the technologies needed to make natural gas a main transportation fuel across the U.S. If that happens, companies like Clean Energy Fuels (CLNE) and Westport Innovations (WPRT) will really benefit.

-Mike

Interesting angle mike, I actually work as a control room operator at a gas plant (a plant that process's raw sour natural gas into, sweet, de-ethanized, debutanized gas, and all its liquid hydrocarbon). I think gas will stay low for some time, with advent of shale gas/fraccing theres a major glut which should draw in savvy business oppurtunitys.

Pretty good call on Westport!  Up 20% so far today.  It's a long-term play, but I think a good breakout move from here, if the markets start turning around of course.

They signed a deal with Caterpillar (CAT) this morning to develop natural gas engines in off-road vehicles and trains. 

I'm a long WPRT as long as natural gas prices remain low.  Demand will increase 17% over the next five years.  Good signs for Westport!

-Mike