Boring Friday is upon us. Weather models are pretty well holding their same patterns, both in disagreement still. This will most likely change over the weekend, but for the bulls/bears is anyone’s guess. When weather forecasts look too good to be true heading into the weekend, and pricing is ready to reverse, I’ll bet on the reverse. Right now this is not the case with weather forecasts or pricing. We will get a glimpse of managed money positioning late today.
2 hour chart showing a broken uptrend, yet it continues. I believe this break shows signs of weakness in the up trend. Look for slight improvements in my technical analysis in the coming weeks. I’m actually reading (a book that is). I can’t say I’ll ever be a true perma-bear, but I continue to be skeptical of the bull scenario here.
That’s really all I’ve got today. Things are too unknown heading into the weekend. I’ll remain out.
Thursday and lost once again. I’ve gotten to where I don’t like EIA report days. The market waits for that one moment and acts irrationally, sometimes for the rest of the week.
Be wary of the GFS forecast. GFS and ECMWF are in total disagreement where it matters most (11 – 15 days). Prices appear to be in a wedging pattern, but is in no mans land. I suspect today prices will creep slightly higher in anticipation of today’s EIA report. After that, you’re on your own. Even if we break higher, I’m skeptical.
I plan to wait today. I’m paranoid and certainly not going long right now. I shared this next chart on Twitter yesterday.
This is an amazing chart in itself. It shows us how weekly storage changes in comparison to the 5 year average. It shows how much more gas has gone into storage all year vs what would be the 5 year average. 2019 in the last few weeks have dropped below the 5 yr due to cold weather. Genuinely cold weather cannot last all winter season.
The reason for pounding my head against the wall with the oversupply is to make you aware that are most likely pricing is not going back to $3. If they do, it will be a great place to short unless the blizzard of the century is upon us or something drastic happens to the supply.
As for today, I’m going to sit back and enjoy the show. I do hope we go up today and maybe next week so I can take on a bigger short position.
Posting from my phone this morning, forgive me if I leave something out.
First thing, I sold out of UNG and have not chosen to re-enter, yet anyway. I wanted to enter and hold DGAZ but it felt rushed so did not try to get that posted. Anyway, the move late in the day, pit close most would say, NG turned and dumped. Weather was preached again. Weather always does its part to buck the trend, but this 5c move was profit taking at the end of a tremendous run.
This morning, prices have fallen a bit more, i would say a GFS (weather forecast) update might actually be responsible this time. GFS does this, gets ahead of itself, then corrects, what fun!
Daily chart looks to have a small wedge look to it, but i lack the confindence to choose a direction at this point.
That being said, the market is still oversupplied, I’m going to repeat that a lot, evetually it should come with some news of bankrupt operators (producers). Over the last year it has spelled out cuts in capex. I may or may not be near the market today, so I’m out and happy. It was a good first win for my “example account”. I’m really more interested in the market testing $2.3 or $2.5 on Jan contract.
First up, I put 9% of my funds in UNG late yesterday (posted on twitter when I made the trade) and I’m glad I did, looks like we have a little breathing room this morning. A stop right now would be back at my entry of $17.92.
So weather does not always set the tone, but this time I believe it has. Of course it would not have been possible without managed money positioning and price where they currently set.
Managed Money is showing a substantial increases in short positioning. This data shown only runs through Tuesday Nov 19, 2019, the report may have not been updated this last Friday. This leaves me to assume that positioning has swung much further to the short side, leaving the door open to a rebound in pricing.
The chart is showing what seems to be a clear signal that the market wants to go up from here. There is still room to get in UNG or possibly even UGAZ if you must.
Back to weather; both forecasts are showing a bit of cold coming in to the right locations to make for higher HDDs. Both weather models are in agreement as of right now, so all is well for the next 10 minutes anyway 😉
I’m still not so good at picking how far the price can travel, my guess is between $2.5 and $2.56 on Jan contract. This would be around $19.2 and $19.7 on UNG. I’ll be content with $19.2. Again, I’m keeping my stop at $17.92 for now
Well great news! NG is even more oversupplied now. Well that’s great news if you like this ongoing trend… Production has apparently hit a new high over the weekend. This is not an unusual for production to add during the winter season, but being that the market is already oversupplied…. The market appears to be on track to match winter of 2015/16. I believe this will spill into summer of 2020 now, whereas 2016 was a recovery year.
In 2015, oil and gas were more in sync with the oversupply theme. This caused more of a crash in rig count; whereas, now the rig counts are falling but at a much slower pace. Looking at the EIA Monthly Drilling Report, we see drilling rigs for most areas still not at lows seen in 2016. Appalachia region does seem to be tapering off quickly, but still not at lows. Any of the oil producing regions, such as Permian are no where near rig count lows, thanks to oil prices helping those companies continue to produce. This is not a strong theory, but just the figures shown in the drilling report tell me that production is going to continue on, prices will continue to fall, this will spill into next summer.
As for right now. Prices dropped hard Friday. This fall seemed a bit overdone to me, but it is what it is.
Daily chart showing a bounce and if we hold, we’ll go higher.
The 2 hr chart looks to be trending up still, with a slight pull-back.
I should mention I was short at H/J spread and I’m covering that now around 8c. This is in hopes the spread will pop back up above 10c-15c. I want to go long UNG here with a stop at Friday’s low, but I’m just not feeling it. I will check periodically today to see if I feel more confident in the trade. The market is just so oversupplied.
Posting from my phone this morning. Looks like it was best to hold off on that UNG position after all. Weather forecasts are confirming temps are going to swing above average and prices are responding accordingly. The market wants to go lower. It has all year and has run further down with any excuse to do so.
I’ll be waiting for a better reason to get back into UNG next week. Hope the weekend treats everyone well
With my limited knowledge of technical analysis, this looks like a turn. I still don’t have high confidence since both weather models are showing weakness in the forecast. This could be short positioning covering before Thanksgiving, isn’t that a thing? If I were in charge of millions of dollars that belonged to other people (especially if I were ahead for the year), I’d want to cover and feel the relief knowing I can go spend time with my family and not even have to think about the market. Also I still believe new short positions will be quick to take profits. Why else would the market bounce on a lack of cold in the forecast?
That being said, I’m going to keep my paranoid stance on the UNG position I took yesterday afternoon. I will keep a mental stop at my purchase price of $19.32 until market open and place a market stop at that price.
Gonna keep my message quick today. So that’s it, stay long with a stop today and be thankful if it doesn’t stop out. If UNG gets close to $20, I’ll consider selling. Let’s see what happens.
Not going long just yet… First off the 2hr chart looks too good to go against.
Clearly in a down trend, and why not, tis the season. Maybe we get a vomit day occurrence in the next couple weeks. I should probably explain that some day. So the weather forecasts are not filling people with holiday cheer nor are they giving traders a reason to hold a long position. Not yet anyway. Price does matter, but I’ve learned it matters less in the face of a solid winter down/up trend. Winter trading doesn’t stay range bound based on price, it’s more about indecision on which way the next wave is.
If you got in DGAZ yesterday and stayed, good for you, wow I missed out. If you’re still holding DGAZ, even better I would let it keep going a bit. Of course I’m not interested in entering now, so I’ll wait for what I think it s a good place to go long. I’ll probably be too early, so be aware of that.
Price is still important, so if we get to $2.5 Jan gas, that’s a big mental number. This area has my attention for now.
As far as daily chart goes, the price has broken through a strong trendline area, and touching the lower BB. I should add that on Aug 5, the price bottomed at $2.475. This would strengthen the argument for chaos in this range.
Again, If you’re short here, great work. If you’re ready to go long, be patient; If you gotta scratch that itch, get UNG as there is plenty of money to be lost in UNG without the decay of UGAZ. You can always switch to UGAZ when the timing is better, like waiting for the turn to happen. Be patient.
Well aren’t we all glad we didn’t hold long over the weekend. NG is back where we started Friday morning. We learned something though; the market must have “sustained” cold weather to go up from here. Even with TDDs above the average, my bet is that prices will continue to fail to get above $3 for Dec or $3.25 for Jan. For now anyway.
As you can see here we actually have less storage in the ground now compared to 2013 at the same point heading into winter of 2014. I’m using this to show what possibilities can occur, no matter how slim the chances of them occurring.
To take this a step further, we’d have to look at overall supply and demand, also HDD vs weather related demand. Something I don’t have time to do at this moment. Being that it is the more important factor, storage must be monitored every year.
What else do we know? Weather forecasts are showing some cold, but not life changing cold. LNG and exports to Mexico are just not enough to boost demand. The market is looking like it will be oversupplied forever. Canada has more gas they’d like to sell to the US if only there was a need for it. Expect prices to stay suppressed.
On to the chart. Being that I’m more at home talking about fundamentals, I’m not going to say much here. Prices gapped up and failed in a big way. This is a rather large red daily candle to start the week off. This tells me more of the same, prices are still under major pressure.
I cannot say with confidence I believe that prices are headed lower. If we look at the 2hr chart, it shows a hard fall. It feels as though we are range bound here. I am most interested in a short position to see if pricing can get back to $2.5 for Dec contract. I can’t say that I would take a position today, but get if I got in DGAZ now, I would stop out at $118 today. And the position would be absolutely no more than 10% of my funds.
All I have confidence in at this point is longer term, prices stay depressed. This could be good for an options trade or spread trade. I will put this on my list. Tomorrow I should switch to Jan contract on the chart. Good luck trading.
Update. I would trail the price of DGAZ and take profits, don’t let it fall all the way back to $118. $4 trail would be my preference for DGAZ.
First off, daily chart is either showing us gas prices want to turn here or this is a bear flag. There are multiple areas of resistance, so prices could bounce around a bit on their way back up, or i think we could get in a range until weather/production figures it out for us.
I don’t know what the last weather forecast is showing, but is probably a little colder or a little warmer. The market must have a strong cold signal or prices will fail to go very high.
Because of where the price is, I’m going to assume DCOT positioning will show short position increase; I’m ready to see what the report shows.
2 hr chart is pointing up. It is boring Friday, I dont expect much and I’m staying out on the basis that weather blunders have the biggest window to develop over the weekend. I don’t think the price is unusually low so no long. I don’t see a clear signal to short either so I’m out, holla.