Support/Resistance to look out for the week of August 24th. If one of these numbers break, look out for the number beneath it to hit.
These numbers have been taken from charts from 1994-2009 and are accurate.
3.15 Resistance
2.90 Resistance
2.75 Support (now resistance as of sunday futures).
2.70 Support
2.64 Support
2.50 Support
2.20 Support
2.00 Support
1.75 Support
1.65 Support.
Natural Gas has a lot of support underneath (thank god). Lately we have been in selloffs.
It should STOP at these key support levels. Really big ones are $2.20, $2.50 & $2.70.
I put this picture up to emphasize. The support levels of $2.20 & $2.50 will hold (short-term)
Summary:
Options:
Usually P/C ratios are contrarion indicators. However, someone is making a large bet on the $NATGAS futures. 10x more puts than calls. Theoretically this is bullish. However,
It is widely known that options traders, especially option buyers, are not the most successful traders. On balance, option buyers lose about 90% of the time. Although there are certainly some traders who do well, would it not make sense to trade against the positions of option traders since most of them have such a bleak record?
The P/C is used for u.s equities, I have never seen it for commodities. Yet here is the data anyways.
Then again, it could just be Encana hedging.. or smart money knows someothing we do not..
December $3.000 puts
Open Interest 24413
compared to
December $8.000 calls
Open Interest 2329
yikes..
Ratio of Oil to Gas Prices Breaks Above 19-Year High
The ratio of crude oil to natural gas futures prices on the New York Mercantile Exchange reached its highest level in over 19 years during today's trading session.
CFTC regulations
Exchange-traded funds have drawn increase scrutiny from the CFTC amid concern that the funds are distorting commodity prices.
Oversupply Issues
U.S. storage depots have been bloated for months with large amounts of unused natural gas because major industrial customers have cut back severely on energy use during the recession.
‘‘It’s going to be consumption that’s going to cause things to turn around...How far they go up is going to be a function of how much consumption there is,’’ said Soucy.
‘‘And so for that you’re going to have to look at what the weather’s going to be like this winter, how quickly is the economy going to pick up so that we see more industrial commercial use for the gas that’s fallen off since the recession.’’
Poll
Half of the people are bearish while the other half are bullish.
Futures Price:
As of 7:22 PM sunday we are down.. NGU9 Natural Gas 2.7350 -0.0690 -2.4610
Hurricanes:
The 2009 hurricane season, which runs from June 1 to Nov. 30, got off to a quiet start before three named storms formed in a period of 48 hours Aug. 15 and 16.
Charts:
First I will introduce charts from 1994-2002. They are shown in this post to determine key support/resistance levels. Then I will introduce charts after 2002.To summarize the charts from 1994-2002, it shows basically it is possible to oscillate around the $2-$3 for a couple of weeks.. I really have zero clue on what the market will do. Once we get into September I'll have a clearer picture. Those that are long.. an exit point will soon emerge.. possibly on August 27th. When I have another 10-20 hours on my hand, I will do a cycle analysis, using statistical models.. that will have to wait.. maybe a couple of weeks.
1994 charts
It does not show much... but here it is incase anyone is interested.
1995-1998 charts
1998-2000 charts
2000-2002 charts
Here are the more conventional charts from 2002-2009. I am presenting to everyone the bearish/bullish cases. Unfortuantely, short-term there are no bullish charts. However, the longer-term charts will dominate but they usually take a couple of weeks to settle in.
Bearish Case (short-term view of natural gas):
The short-term charts are indeed bearish.. The downside targets for this triangle breakdown is 2.45 (pessimistic) and 2.75 (optimistic). The bears can push natural gas lower, especially with all these unknown factors with the CFTC..etc.. .
Bearish Chart 1 (240min)
Bearish Charts
It really depends on how you look at things. See my notes on this chart about no bottoming candlesticks being shown.. That's what we need this week for a clear, confirmed bottom).
Bullish Case (eventually it will be bullish.. its just a matter of how long we stay bearish.. i'm not discounting $sub 2.50)
This chart below, shows 11 different times where we`ve hit the bottom black trendline. On august 21st we finnaly hit it again after many months. If it holds for good, natural gas will go to 10$ in the next 2 years. If we can break the $3.20 level.. bulls can have this.
Bullish Case 2:
Look at the december futures.. It is not making new lows, making me believe we will quickly reverse from the sub $3. The october futures are higher than $3 too...
BOTTOM LINE:
Buy when people are scared.. people do not look that scared yet. At 2.45, people will be looking really really scared.
Natural Gas has been in a downtrend for approximately 52 weeks. I believe natural gas is bottoming, however we could hit $2.45 before hitting $4.00, suggesting more downside in the days to come. We are at long-term support levels at $2.70. If that does not hold next week, watch out below for $2.45-$2.50.
I am short since the trend is still down.. I'm slowly scaling into longs.. Hurricane Season could be a catalyst to bump up natural gas prices temporarily.. . Natural Gas has been in the news everywhere with CFTC regulations and no bottoming signs in sight..
Remeber, natural Gas is not going to zero.
Also buy when people are scared.. How do we decide when people are scared? I do not know. Maybe we shuold have a Natural Gas VIX...
Good luck.
