Is anyone watching NatGas it is up +- 8% and from what I can see the media are not even talking about it. It has confirmed an A down on the monthly but is now pushing on the weekly A up and its only monday. Its a little early to tell but if NG starts confirming Aups in view of an extremely negative macro/sentiment back drop things could start to get interesting. Might be one for the watch list.
The ACD Method
- Thread starter sbrowne126
- Start date
Interesting that February contract is +7% when January is +9%. Price drop was absolutely crazy (props to Maverick and his ACD back in September!) so maybe its time for a little squeeze. Its winter after all and there were inventory draws even in super warm weather. Question is how far can it go and for how long.
Here are my weekly ACD charts for NG continuous and the widow maker spread (NG H6,J6 contracts). Both have pushed through the weekly A up. I would like to see more sustained trading above those weekly A levels to call them confirmed weekly A ups.
Quote from Mav;
People often ask what is the best way to try to pick a bottom in Nat Gas. Well, the best way probably is not to. The 2nd best way is when you have something that has been this weak for so long is to make your first entry a buy on strength, not weakness. In other words, wait for at least a confirmed weekly A up. Trying to buy at lower and lower lows is very dangerous.
In the past Mav has talked about NG's strong seasonality. Looking at the following chart although limited in data points, seems to show that we are tracking the seasonality pretty well at least according to working underground storage figures.
http://ir.eia.gov/ngs/ngs.html
Quote from Mav;
People often ask what is the best way to try to pick a bottom in Nat Gas. Well, the best way probably is not to. The 2nd best way is when you have something that has been this weak for so long is to make your first entry a buy on strength, not weakness. In other words, wait for at least a confirmed weekly A up. Trying to buy at lower and lower lows is very dangerous.
In the past Mav has talked about NG's strong seasonality. Looking at the following chart although limited in data points, seems to show that we are tracking the seasonality pretty well at least according to working underground storage figures.
http://ir.eia.gov/ngs/ngs.html
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I think underground storage is just the way how this market works physically. Gas is always pumped to the underground storage for the winter season. That's how H-J the widowmaker spread works - if it's still cold by the end of the winter and the storage is already empty that spread explodes. That's why it has this risk premium and trades in backwardation but closer to expiration it usually goes back to zero and to normal contango (maybe even steep contango as spring has little demand for gas). This attracts mean reversion traders, but in case of extreme conditions selling that spread might make your wife a widow
Great action from UNG today failed at the A down closed well above the A up. It is now above the weekly Aup level.
USO also the same and spent all of todays session confirming weekly Aup.
XLE same again easily confirming the weekly A up.
UNG is now at -1 on the 30 day from -9 3 days ago and the 5 day is now at 0.
Even though UNG is starting to look good I would most probably wait now until after the holiday period. New levels coming up for January and it would be a great sign if we got a monthly Aup.
USO also the same and spent all of todays session confirming weekly Aup.
XLE same again easily confirming the weekly A up.
UNG is now at -1 on the 30 day from -9 3 days ago and the 5 day is now at 0.
Even though UNG is starting to look good I would most probably wait now until after the holiday period. New levels coming up for January and it would be a great sign if we got a monthly Aup.
There can be a lot of end of year distortions in oil and gas, just be careful with that. Both markets were long overdue for squeezes.
Looks like the risk indicator has turned off (i.e. get long risk).
Knowing that there are many ways to increase risk, e.g. pulling on Superman's cape, which tools would you consider employing now to take advantage of these financial circumstances?
There are several trades that look good now. In index land long TF/ES spread. In the FX land long USD/CAD on pullbacks. In the sector space, the solar ETF TAN.