NG in constant oversupply. Export market is years away, so NG will remain depressed. Contango will eliminate your net worth before prices rise.
Natural Gas
- Thread starter gdtrader
- Start date
re the poster who said something about the interest in ung (i didn't quote b/c the chart was huge) - there is zero correlation b/w a huge volume increase and the future direction of the price. the huge volume day could just as easily be someone betting against ung (a pretty good bet imho b/c of the way it's structured).
i don't know how many times i've heard people say about a beaten down stock/security/whatever "it's down a lot, it just had a big volume day therefore someone is calling a bottom".
just watch price and don't predict the future. if price stops being in a downtrend (price is above 50 MA, or above 20 day high, whatever trend measure you want to use) then it's ok to enter saying the trend has reversed but not before.
i don't know how many times i've heard people say about a beaten down stock/security/whatever "it's down a lot, it just had a big volume day therefore someone is calling a bottom".
just watch price and don't predict the future. if price stops being in a downtrend (price is above 50 MA, or above 20 day high, whatever trend measure you want to use) then it's ok to enter saying the trend has reversed but not before.
I actually see quite the opposite of your observation re there being no correlation between interest & price movement. Frequently, heavy interest occurs @ bottoms.
Also, huge volume doesn't mean that someone is betting for or against something... It simply means there were more contracts/shares traded.
If you read my trading thread, you will see I know you have to have price confirm your beliefs first. It's a simple observation: If you look a lot of the bottoms in popular ETFs, volume like this usually occurs at bottoms.
Why would there be so much interest at this level? I think big pockets know something. There are only a few # of big pockets relatively speaking (Producers, and other forms of managed money). Not to mention, price is forming a base. Visible support is there already, we just need a breakout to the upside.
I would never short something this low anyway because of the limited downside. It would have to be for a very short term swing to short this.
UNG is the tail that tends not to wag the dog.
Given the collapse in seasonality the last several years and the huge supply, this might be a temporary base, but IMO every rally should be sold into.
Because there is so much supply, there is really a limit to what kind of supply-based price shock we could experience at Henry Hub.
Most price shocks going forward in NG markets will more than likely originate at basis locations and those will be caused by capacity/logistical constraints across the pipeline infrastructure rather than low supply.
not to speak for the other poster but prob b/c of the structure of UNG not necessarily b/c of a bearish view on NG but i'm sure that's part of it. UNG loses 20-30% each month on the roll although this can vary widely as contango/backwardation changes a lot.
re the previous poster who said volume marks bottoms, i agree sometimes you see this but it doesn't always happen. sometimes there's little volume at bottoms b/c everyone has already sold on the way down.
So much gas they have to re-export it.
