Can Start Buying Natty Now

[DrEvil]

I think that if price can get back above the 6.2 area today next few days are likely to see a move back to 6.55

 

[Khaled187]

Downside trend in Natty over? Seems like its time to switch to long positions. Going long in the winter of last year was sweet.

 

[Khaled187]

Natural Gas is all loved again. I guess its because October is the end of inject season. Any input on price action and possible pullback that should be taken as an entry opportunity?

Lots of potential in that animal.

 

[scriabinop23]

Quote from Khaled187:

Natural Gas is all loved again. I guess its because October is the end of inject season. Any input on price action and possible pullback that should be taken as an entry opportunity?

Lots of potential in that animal.

yea and nukes are coming offline more and more. november with an 8.50 price target here we come.

 

[Khaled187]

Concern about a storm drove todays rise in price.

 

[scriabinop23]

Quote from Khaled187:

Concern about a storm drove todays rise in price.

Some say its La Nina speculation..

who the hell knows.

 

[tommymoose]

Vroom Vroom?

UNG breaking out above the past months highs of 41.43... I noticed the NG contract has not though

Is this short covering in the ETF that the arbitrage programs cant hande or something else??

 

[Surdo]

November NG was up .516 today, $7.445 NYMEX Monday close. The ETF never corresponds to the front month due to some secret contango corruption!

 

[tommymoose]

Oh aright, thanks Surdo.

I'm new to trading the energies markets - I take it the actual NG contract reacts more predictably to S/R (previous swing hi's and lo's in particular) and the ETF just loosely goes along for the ride?

For example, this isn't a breakout since the NG price hasn't broken 7.50?

I've been long UNG since 39 with a stop a little above 37, but if the price reacts to the S/R of the NYMEX contract and not the UNG ETF I may need to rethink my stops and targets to account for the discrepancy.

 

[scriabinop23]

Quote from tommymoose:

Oh aright, thanks Surdo.

I'm new to trading the energies markets - I take it the actual NG contract reacts more predictably to S/R (previous swing hi's and lo's in particular) and the ETF just loosely goes along for the ride? I've been long UNG since 39 with a stop a little above 37, but if the price reacts to the S/R of the NYMEX contract and not the UNG ETF I may need to rethink my stops and targets to account for the discrepancy.

yes you do. and remember that rollovers in contango environment are not favorable for the UNG price. ie. oct gas expired 70c below Nov prices. When November became front month at 70c higher, UNG price did not change.

So this winter as we easily hit (if $86 oil keeps up) $9.00-10.00 gas on front month contracts, you'll see that the UNG will likely only move up as much as front month buying supports it.

Remember, Feb08 gas is trading at 8.36 right now. With the way the curve moves, 9.00 Feb gas is probably only 90c of front month buying away, not 1.50 (assuming front month is 7.50, which it is near). So in the next 3 months we might have 90c of front month buying to yield what looks on a continuous chart a 1.50 ascent. In UNG terms, I think its something like 20c of NG futures movement translates to about 1.00 of UNG.

Same thing holds true for crack spread buyers who want to run up an ascent. Even though we're at 3.00 zone for crack spread front month, its worth noting Mar08 spreads are already at 9.27. A lot of 'untradeable' rollover gaps.