9:13 AM update
I noticed we broke 2.90 pretty badly at about 8:40 AM,.. if 2.90 holds, we could end the day basically +/- 1%
2.90 is providing support.
Today's main Support & Resistance Levels to have an eye on.
By looking at this chart, we had a panic attack at the $3.00. I believe this break sub $3.00 will not last..
Usually when you have a real breakdown, the commodity bounces off a key level ($3.00 here).
We did not bounce off $3.00 making me believe this breakdown is unsustainable (in-the long term.. we could just end the month at 2.90, and roll into october with contango of 10%).
Support at 2.90
Resistance at 3.00
Contango:
While the SEP/OCT has improved since you guys finished, new wides exist:1) OCT/NOV settled tonight at -92c. This was at -64c on July 22nd.2) The "storage spread", the OCT/JAN (which you guys are not expressly exposed too, just the sum of your OCT/NOV, NOV/DEC, and DEC/JAN exposures) settled tonight at -202c.3) And to put things in perspective, the SEP/JAN settled tonight at -$2.40, or 82% of the cost of SEP. No other stat really exemplifies that there is simply no unassigned storage left (meaning that while we haven't filled yet, you can't currently find any free unscheduled space). The price someone is willing to pay to carry SEP gas for 4 months is 82% of the cost of gas itself. Get your head wrapped around that one.
The price of gas plunged by more than 5 percent Thursday morning after the storage report was released, and trading on the New York Mercantile Exchange settled at $2.945 per thousand cubic feet. That is a 78 percent drop from the peak that gas hit on July 3, 2008, of $13.58.
Video:
"You maybe not catch the bottom.. but there's big upside".
http://www.wsmco.com/show.aspx
NGI report :
The weekly EnergyDepartment natural gas stockpile report showed that underground storagein the lower 48 states rose by 52 billion cubic feet, to about 3.2 trillion cubic feet, for the week that ended last Friday. That is astorage level 21 percent above the level a year earlier and 19 percentabove the average for the last five years at this time of year.
Hi guys, sorry for the late update..I was completely wrong about yesterday's NGI report. Today was not a good today for anyone who was long (including myself). Over the next couple of days, expect random walk to take place in the commodity markets (2-4% +/- swings). I believe a bottom will be made soon. When? In the next 2-4 weeks.
If you shorted Natural gas at any price in the past 52 weeks, you would be pretty happy. That big down trend is still intact and going strong for 52-weeks. A trend this strong could eat up your bank account pretty fast when being on the wrong side of the trade. The relative strength of Natural Gas is absolutely ridicoulously low. When Oil is up, natural gas is down, when SPY is up, natural gas is down. Real technicians would not trade Being this ETF until a clear breakout to the upside. But they'll miss most of the move. You can choose to play the 'bottom picking' and get wipsawed around, or play the breakout in about 3-6 months.
Why the huge drop in price today?
The large price move today could be OPEX related also the NGI report released today at 10:30, I believe was better than expected.
August 26th is NG futures OPEX
August 21th is Equity OPEX.
What's your sentiment like?
I am bearish, but scaling into longs. How much downside do I expect before reversing? It's impossible to say. You need guts of steel to buy at these levels, but the reward/risk is definetely there.
One important fact that we need to rally sooner than later, because once $3 is gone, you can kiss it goodbye. So this recent price drop to $sub 3 in NG, could become bearish if we just keep on dropping to low $2.00s. I do believe the $3 level will hold and we'll revert back to the mean in the long-run.
Bullish Chart:
Note it's tempting to buy, but natural gas has wipsawed us way too much. Watch out.
Bearish Chart:
Most of the time, from what I've seen, natural gas has completed it's 'technical retracements'. This is just anectodal evidence.
Worst case scneario I see natural gas at 2.45-2.75.
Here is the chart.. I am posting this late.. I remember MAKING this chart 3 weeks ago, and I just realized the selling pressure came true.
Here is a bearish chart send by Mike if support is broken.. I need to email him and ask him if we broke support.
