Last month I published a post about sentiment being way too bearish in the markets and that a quick 500 point correction was coming --> see the post click here.. good luck guys..
Also here was my original call for a correction to 1150 back in 2009.. this chart has worked out 100% of the time. if 1150 ON THE s&p holds, the bull market will continue, otherwise watch out for a double dip scenario. see chart of predicting targets .. click here
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Hi,
My bearish stance on the Natural Gas markets continue to hold into the summer as we are near the lows of the year. Notice that last week I had mentioned that the rally was a dead cat bounce--in fact for the past 14-16 months every bounce of natural gas should of been shorted.. Until we have sufficient evidence of a trend change, take trading positions with the bearish trend.
Both HNU.TO and UNG recorded some of their highest trading day volume in a while--which infers two things.
1) If $4.00 holds in the front-month futures, I'd be going long in UNG, as the high volume on the -8% day in the NG futures means accumulation.
2) .. but if $4.00 does not hold, there is fairly large probability we shoot straight down to $3.80 and then $3.20 if the 80s crack... the high volume day was likely just noice or retails getting out.
Natural Gas Commentary:
- Natural Gas Prices are stuck in a trading range in-between $3.90-$4.40.
- The huge-sell off on Thursday is just the start of more sell-offs to come IMHO (as long as $4.00 does NOT hold).
- The bearish trend will slow down/stop if $4.00 HOLDS.
- From experience, why we have not bottomed, is that you need a couple of funds to liquidate before. Oh yeah, and seasonality kicks in too--natural gas, historically, is approaching it's most bearish months.
- Lastly, I recommend only touching UNG. There is no need for anyone to play HNU/HND with large amounts of money unless you are up 30%+ in natural gas for the year.
Short Term:
Buy indicators are rolling over to the sell side. Nothing goes down in a straight line, and it may take until late May/early June to finally hit the mid $3.50s.
Long Term:
There is a 50/200 MA Crossover SELL signal.
The last time we got one of these is when natural gas fell from $15.00 to $2.50.
History repeats itself, if the 50/200 ma crossover is confirmed, natural gas will go as low as $2.00
One crack of $3.80 and selling will increase.
My advice:
- Do not hold any long positions for too long.
- PLAY THE TREND.
- Don't get cute with your trades. Natural gas NEVER bounces. When it goes higher, it KEEPS on going higher. When it goes down, it KEEPS on shooting lower-- realize that. Natural Gas trades 100% differently than the DOW JONES.
- Get short at optimal entries such as $4.45 and $4.95!
Charts:
