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.
Thursdays are always a hard call. I’ve not been so in-tune with the market this week. This should improve by Monday.
What we have:
Weather: GFS forecast is showing consistent below average temperatures, but ECMWF again disagrees
Demand is strong currently but without below normal temps, storage will remain on average
Production is flattening out some but still pointing up
Short positioning once again has some room to drive the market
Lets look at the chart.
This would be an area I’m not too sure about. I want to say we are getting set up for a rough ride. If I had to choose, stay short on this. Price is right at resistance and it hasn’t close above that line. Stay short and possibly place a stop no in the $2.6 area for Dec contract. I’m going to sit out for the report today.
So the 2 minute glance tells me that daily we are possibly bouncing off of the support line I previously mentioned we must break through. It has now become resistance. So I don’t have time to do the correlation to DGAZ, but a short position with a stop at say $2.58 would be my choice today. I may actually get in DGAZ later with a stop at that. Right now I gotta go.
Nothing new today. It appears the Dec pricing is on track to fall to $2.45ish. From there I’m clueless. Maybe we’ll know more when it gets there. I would normally be short here, but for personal reasons I’m staying out. Sorry for such a short update.
Weather. Everyone Friday seemed to be talking about weather, and maybe all weekend. I now see why jackasses like to say NG has nothing to do with weather. If not for any other reason than to get everyone riled up. So Friday… Dec pricing crossed above the upper line of my channel and then fell and closed out he day below that upper line. Being that it was Friday, I was distracted and I missed it. This happens.
From what I could tell weather forecasts shift a little more bullish over the weekend and it was suspected the market might give us a positive response. It is not surprising to see we got a gap down and prices continued to fall from there. Now what?
Seems we are still forming the right shoulder of a head and shoulder pattern. The lower green line that goes across the screen could be considered the neckline and the price has fallen below there. Are we off to $2.45ish? I can’t say, but any weakness in the market (especially weakness in weather forecast) and prices should fall.
There are a couple of areas of support on the daily chart. Once at $2.59 and I would say strong support at $2.57. This is 75MA and the low for the last few weeks. I would almost be interested in buying DGAZ now at $117 with a stop at say $115. I don’t feel very strongly about this so I’m staying out today. Thanks for listening.
Something I didn’t cover very well when reviewing the Webull mobile app was how to make some changes to get the app appearance similar to what I’ll be showing in my examples. I didn’t realize i had already made these changes, so we’ll review. When you log in and have your watchlist pulled up on your phone, you can tap UNG to see all the details of UNG. The default chart is a line chart. I will be showing everything on a candlestick chart. To change the chart style to candlesticks, tap the candlesticks located in the upper right of the chart. I’ve circled it in the image below.
If you like the white screen, you are pretty well done for now, skip to the last image on this screen. If you would like to change your screen to the dark screen, go back to the main screen and tap on the menu on the bottom right of the screen. Shown in the image below.
Once in the menu, tap the settings icon. shown below
Then tap night mode to switch to the dark screen.
Now go back to the watchlists screen and tap on UNG again. Then just above the chart, tap “daily”. Now you’re set up with the dark screen and looking at UNG on what’s called a daily candle. On to the next lesson.
It’s Friday! Boring Friday… I’ve shared 1hr chart with one idea, Dec gas price snapped out of the down trend into this slightly range bound channel. The reality here is, I don’t have a clue once it breaks from one of these channels. I’m still leaning bear, I’d like to see the price meet the upper line and if it bounces off, go short. If the price falls today and breaks the lower line, might go short, but keep it small and don’t be surprised if you get a lot of turbulence on the way to $2.5. JDGPRO on Tradingview shared a head and shoulders pattern (when you zoom out a bit) that fits with my lower line of support. This would reinforce my breakdown theory. I’m looking for a short, but will be waiting for long potential closer to the lows we’ve already seen.
As for fundamentals No significant changes in weather, or Supply/Demand at least on the large scale that I can see. Broken record tells us the market is still very oversupplied.
The only bright start still is LNG growth, which on a macro scale is about to fizzle out as well. I’ve been seeing snippets of news about the global LNG stage reaching a point of oversupply. Time will tell and maybe a little research is needed here. For example, just searched google for LNG oversupply and here is an article from NGI (Natural Gas Intel). This article talks about LNG on the global scale. It’s a bit lengthy for just a morning skim. Save it for when you have time to focus. Plenty of good details worth hearing.
I normally end with my positioning and expectations for a trade. I pretty much covered that above. I’ve got a lot of work to do with the day job, and this week has been good to me. I’ll mostly likely end the day where I’m at, waiting for next week to begin. Hope everyone has a tolerable to exceptional weekend.
Split decision on weather forecasts, GFS vs ECMWF (typical this time of year)
Today’s EIA report could be build or draw, but will beat 5 year average
Weather adjusted out, we are still oversupplied
I think the market wants $2.5 Dec gas, but here we sit at $2.658
First, looks like I sold off DGAZ just in time. Yesterday’s rise in gas….. geez. My guess is there were a lot of close stops on the short side of the market, GFS spooked the market and stops were triggered, people wanted those profits more than they wanted to ride it out. Just like myself in DGAZ.
Where do we go from here? I don’t have a lot of confidence to say one way or the other. With a gun to my head, I’d say up a bit more then more downside. 1hr and 2hr charts show price hit the upper BB and pulled back some, and are both pointing up. It is Thursday, I’m planning to wait for the chaos to settle. I’ve just gotten out of one of the best trades I’ve made all year, no need to ruin it.
My hope here is the price moves higher and sets up for another short attempt. Something to watch out for that seems clear to me now; new short positioning is looking for quick profits and will be quick to get out. If that holds true any downward movement may see more jumpiness this winter. Winter will cause wild swings, but in the end, we are still oversupplied, and storage is still very high. Upward movements will remain limited this winter. The one exception to this is if winter weather gets below average temps and stays there more often than not. Even then, prices will still be under pressure until later in the winter season.
Being that the price is where it is, I’m waiting on a rise above $2.7 (maybe even $2.8) or fall below $2.5 for December contract before I get to excited about getting back in. Today’s EIA report should be fun to watch though.
Same thing, different day. The market is still oversupplied, winter is still “on the average”, the trend is on a slow grind down. The market wants to fall.
Daily chart shows a couple of areas of support, but winter trading momentum has appeared to have taken over once again. We look to be on target for $2.5, below that I don’t know. That may be the point at which I consider going long.
Sorry for the short message, today just feels like a continuation of the week. Since we’ve had such a strong move this week, I would like to think we will get a bump in the road at some point soon. It could happen at any moment, but tomorrow is most likely.
I will be watching around 9am Est. The market gets stirred up around that time. If we take off to $120 today, I will cut it off and sell out. That will be biggest move of the year and I’m blessed to achieve it. I will also sell out at $109 today and call it a great week.