Here's Why One of 2015's Biggest Losers is 2016's Trade of the Year...

Grab an aspirin– that New Year’s hangover is stretching itself out one extra day.

Global markets are getting walloped to begin 2016. Only the ropes are keeping China standing. Emerging markets are staggering. Stateside, some brave buyers at the close barely prevented the major averages from suffering their worst start to a year since 1932.

No, one day does not a trend make. But right now it feels as if no one wants to take a chance on stocks, even at these levels…

But just because the stock market train has derailed into a fiery wreck doesn’t mean we’re just going to stand aside and watch it burn like everyone else. We have work to do. There’s always opportunity out there—so we’re digging up what could be some of the market’s most profitable trends in 2016.

With the average investor quaking in his boots and biting his fingers to the nub, where exactly will these moneymaking opportunities lie?

Where Joe Investor fears to tread, of course!

That’s right—we’re approaching 2016 with a contrarian swagger. We’re leaving the crowd behind. What “worked” in 2015 was buying the strongest few stocks on the market and riding them to gains while the average stock suffered. We talked about buying strength again and again last year—and it certainly didn’t hurt our returns.

But with a new year comes new problems for a stock market apparently running out of gas. The fumes in the tank came courtesy of the big F.A.N.G. trade everyone’s been talking about for months. For the uninitiated, that’s Facebook, Amazon, Netflix and Google. The four horsemen of a broken market have kept us chugging along. But even these powerful stocks are losing steam.

Amazon fell almost 6% yesterday. Facebook dropped more than 2%. Netflix dropped almost 4%. And Google—the best of the bunch—lost more than 2%.

So while most investors are stuck watching FANG lose its bite, it’s time for us to move on to some new, unloved ideas for 2016.

Our first trade of the year candidate was absolutely trounced over the past year. In fact, it recently sunk to prices not seen since you first got that dial-up internet connection…

I’m talking about natural gas.

Why buy this dog now?

First, it’s important to know where natural gas has found rock bottom. Over the past 20 years, natty has staged rallies every time its spot price has sunk below $2. Even back in 2012 (when natural gas was still blowing off steam from its 2008 peak) natty ripped off a yearlong rally that sent the spot price from $2 to $6.

Natural Gas

And guess what happened over the holidays? While everyone was wishing for a Santa rally for stocks, the jolly man in red brought gifts for natural gas instead. The oversold bounce began on Dec. 18. And before the New Year, natty found itself back above $2 once again.

But make no mistake—most folks see no end in sight to the natty bear. You could spend all week reading reports that would make you think natural gas was going straight to zero. Just look at the rig count. While North American oil rigs have dropped off sharply over the past year, they remain north of their 2010 lows.

That’s not the case with gas…

Feeling Unwell

“Natural gas is an entirely different story,” The Wall Street Journal reports. “That market is so horribly glutted and cut off from the rest of the world that the gas-dedicated rig count now sits at the lowest recorded level going back to 1987, when Baker Hughes began compiling the figures.

Does it get any more bearish than that? I don’t think so…

Remember, you have to venture out on the thin branches to grab the biggest rewards. And these days some of the thinnest branches are in natural gas. And let me warn you right off the bat—this is going to be a volatile play. By no means do I think natural gas is going to fall into line and offer up an orderly march higher. That just isn’t gonna happen…

But if you have the stomach for a bumpy ride higher, you could be handsomely rewarded. Natural gas isn’t going to streak back to prices we saw back in 2005 or 2008. It’s the potential for an extended bounce off the extreme lows we’ve experienced recently that vault this play to trade of the year status…

Sincerely,

Greg Guenthner
for The Daily Reckoning

P.S.  If you want to cash in on the biggest profits this market has to offer, sign up for my Rude Awakening e-letter, for FREE, right here. Stop missing out. Click here now to sign up for FREE.