Friday's Report #4
I will release the second part of the report on Saturday morning. Why ? Because I am now going to analyze what the smart money is doing with natural gas and I only get their holdings on Friday so I'll post it on saturday!
This report is to be used for the time period March 1st-March 5th.
GDP:There wasn't much significant news this week except the GDP report, released Friday at 8:30AM.
The U.S. economy rocketed ahead at a 5.9 percent pace in the final quarter of 2009, stronger than initially estimated. But the growth spurt isn't expected to carry over into this year.
The signs aren't hopeful. Consumer confidence took an unexpected dive in February. Unemployment stands at 9.7 percent. Home foreclosures are at record highs. And many Americans are still having trouble getting loans.
Forecasters at the National Association for Business Economics predict the economy will expand at only a 3 percent pace in the first quarter of this year. The next two quarters should log similar growth, they predict.
In normal times, such growth would be considered respectable. But the nation is emerging from the worst recession since the 1930s. Sizzling growth in the 5 percent range would be needed for an entire year to drive down the unemployment rate, now 9.7 percent, by just 1 percentage point.
$NATGAS
The trend is clearly down as defined by the blue channels on the chart below. Last june 2009, there was a capitulation low which means one fierce downward move to bottom us out. I belive $4.50 is the eventual target, and at that level I will be going long with stops in the $4.38-$4.42 area.
Resistance: $4.90. [If we break above this we are likely to go higher]
Support: $4.50. [This area will likely hold--so it is a high probability long play].
For you technicians here is the very technical side of natural gas.
The downtrend has huge momentum which means you shouldn't even think about going long unless you have stops. On the other hand, shorts can easily get squeezed too, so essentially, a good play,IMO would be to buy OTM calls on natural gas for 2011, and short UNG.
$S&P: We are in a trading range, play the breakou.
If we are inbetween resistance/support I wouldn't be taking a long/short position but rather a short volatility play.
Resistance : 1108-1122
Support: 1088-1092
