Natural Gas fell initially during the course of the week, but then turned around to show signs of life at the $2.50 level and formed a hammer on the weekly chart. You know that, based upon the cyclicality of the Gas market, in this season I am a Gas minimalist (e.g. sell only, never buy) and only look for opportunities to sell this market as there is just no reason whatsoever to buy Gas in this timeframe.
This is a cyclical trade, and one that I take every year. I simply wait for signs of exhaustion on rallies to take advantage of long term shorting opportunities.
I do believe that eventually we break down below the bottom of that hammer opening up the floodgates to the downside. After all temperatures have been rising in the United States and Europe, and therefore the cyclical trade should push this market to the downside with demand falling off of a cliff. The $2.25 level is a target, followed by the $2.00 level given enough time, and that is my longer-term target. I look at any rally at this point with happiness, being an opportunity to sell the market on any sign of exhaustion. All things been equal, this is a market that I think will eventually breakdown, due to the massive difference between supply and demand.
Currently, the absolute “ceiling in the market” is close to the $3.00 level, and therefore I would be all over shorting that price if we got it. I do not think we do though, and at this point I think we are simply working off some of the massive selloff pressure that we had seen over the last couple of months. Going forward, it is not until about October that I would be looking to buy this market. Even if we did break out to the upside, I would simply sit on the sidelines and wait for yet another opportunity to sell. This is a market that has no business rallying anytime soon, so I will take advantage of any time it gets a little bit ahead of itself.
My default position is to short this market every time it shows signs of strength, with no interest in buying natural until about October. Just sit there and look for opportunities.
This is a cyclical trade, and one that I take every year. I simply wait for signs of exhaustion on rallies to take advantage of long term shorting opportunities.
I do believe that eventually we break down below the bottom of that hammer opening up the floodgates to the downside. After all temperatures have been rising in the United States and Europe, and therefore the cyclical trade should push this market to the downside with demand falling off of a cliff. The $2.25 level is a target, followed by the $2.00 level given enough time, and that is my longer-term target. I look at any rally at this point with happiness, being an opportunity to sell the market on any sign of exhaustion. All things been equal, this is a market that I think will eventually breakdown, due to the massive difference between supply and demand.
Currently, the absolute “ceiling in the market” is close to the $3.00 level, and therefore I would be all over shorting that price if we got it. I do not think we do though, and at this point I think we are simply working off some of the massive selloff pressure that we had seen over the last couple of months. Going forward, it is not until about October that I would be looking to buy this market. Even if we did break out to the upside, I would simply sit on the sidelines and wait for yet another opportunity to sell. This is a market that has no business rallying anytime soon, so I will take advantage of any time it gets a little bit ahead of itself.
My default position is to short this market every time it shows signs of strength, with no interest in buying natural until about October. Just sit there and look for opportunities.