Morning Update Feb 12, 2020

Still waiting, but this morning is interesting…

So my emotional status is in check today. By not adding to UGAZ yesterday, I missed out on a nice recovery. I’m happy to see the market appears to still be trading on changes in weather. This morning’s forecast was an improvement in HDDs. I don’t see it in the map, but I’m not the expert on weather.

I’ve had work interrupt my post, it’s ok, my job comes first. I cheated today and used Webull to my advantage and sold UGAZ before 7am Est, when most brokers allow pre-market trading. I’ve sold UGAZ at $42.41. I will wait to see if prices fall back to the bottom of the current range or close and re-enter there. As for UNG, I will be holding at 89% in for now.

Back from being busy, here are a few more thoughts:

UGAZ on 1 hr chart at Webull

With my paranoia of the LNG market aside, UGAZ is shaping up to follow a new range. I plan to buy at $38.5 with 4% of my funds.

Also aside from my LNG paranoia, fundamentally this market appears stuck, and should stay range bound for a bit longer. Keep in mind, this market is still at record short positioning when it comes to managed money. I believe that as long as fundamentals remain consistent with where they are currently, the price is going to remain consistent with where it is currently. The downward pressure will remain due to a lack of interest to send prices higher. All roads lead to storage on a fundamental basis in this market, and I will remain anchored to that idea.

Natgas weekly inventory vs 5yr Average at RonHenergy.com

I’ll use this chart again, in 2015 the weekly storage figures vs the 5yr average sucked. 2015 filled storage faster than the 5yr average, showing that there was plenty of supply at the time and no reason for prices to move higher. 2016 was starting out oversupplied, but consistently showed the market was not filling storage as well as the 5yr average, sending prices higher. 2019 looks a lot like 2015. Right now, winter demand can skew this chart terribly. If storage numbers can consistently drop below the 5yr average, the market will begin to anticipate this more and prices will be under pressure to rise instead of fall.

Until then, we remain range bound. Back to work.

Oldinvestor

Morning Update Feb 11, 2020

It seems I’m not off to a good start this morning. I added a plugin to tweet my posts when I publish them. Apparently one must transition their twitter account to a developer account, bla bla bla. Aint nobody got time fo that…

So weather is not even trying to tease us with the idea that cold patterns are forming. I would attribute this last fall into a new range some to weather, some to other fears of swinging back to an oversupplied market. More severe oversupplied market rather. Production seems to be back on track to it’s slightly oversupplied state, with what seems to be a slight down trend.

Production YoY shared by HFI Research here

HFI will share their production numbers once and while for free. The article the image above is shared in a free article . This image is before there was a dip in production. Production has returned to these levels, but there is a slight downtrend. I am, without a doubt, sure this will continue at these prices. Most producers had to adjust how they did business after 2015/16, but didn’t get much time to recover. Production most likely not create new highs from here, and mostly likely trend down this year.

UGAZ on 1hr chart at Webull

So I had drawn these lines to kinda represent where maybe I should have bought UGAZ. I have them almost evenly spaced because this seems to be the pattern, prices fall another leg lower and range from there.

Since I am feeling a bit shy about entering the market further with UGAZ, for now I’m going to hold what I have and not add to my long position. I admit I feel a bit emotional about what might happen with the LNG market. LNG exports does account for near 10% of U.S. natgas demand; this is plenty to pull the price down further if LNG exports slow. I don’t think it is time to panic and flee the market. If natgas prices drop sharply, this is an opportunity that will not wait, and I will surely add to my long positions. For now, I just need to wait. If anything drastic changes, i will post to Twitter. Good Luck

Oldinvestor

Morning Update Feb 10, 2020

So weather shifted bearish again, and production is back online. I would believe that is pretty much it for the weekend. I did see a comment about LNG, but I have no idea the validity. It would backup my fear that the LNG market is flooded and there is no where to go with all that gas. It could just be there is a a temporary delay when offloading gas to China since they are not being very cooperative over this virus situation. I have not mentioned in a long while manged money positioning, which is still showing record short numbers. This has allowed me some comfort in my UNG holdings.

As for me, I’m going long; adding rather.

NGH20 on 4hr chart at Tradingview.com

It appears as though support will become resistance. At least I see the potential. Natgas gapped below my support line, only leaving me to believe prices are going to enter a new range here.

I believe this may be a bit early, but I’m placing a limit to buy UGAZ with 4% right now at $40.85 I will plan to wait on adding to this. If the market decides to go higher, I hope to get above $44 to sell UGAZ

I’ll continue to hold UNG with 89% of my funds. I will soon have a page with my current holdings that can be viewed any time. Don’t get in a rush here. Good Luck

Oldinvestor

Morning Update Feb 7, 2020

I missed by 11 cents? Something like that, I wasn’t able to enter UGAZ and go for another ride. Had I been watching the market I would have gotten in at least at $44. One of these days trading will be my day job.

On with today… Weather forecasts have been pretty volatile from one forecast to the next lately. From yesterday afternoon to this morning, the ECMWF has had little change HDD wise. The big difference is between the ECM and GFS models. I normally don’t think too much about these differences. I’m just watchful of disappointment. There’s always plenty of that to be had.

Production is showing a major drop, 1.5 – 2 Bcf/d kinda drop. Which if that were to stay true, the market would flip to being under supplied. My guess is there is either freeze ups in the northern US, or maintenance going on at a larger pipeline location, restricting flow. Either way, production will return to the norm soon enough, I’m sure.

NGH20 on 2 hr chart at Tradingview.com

Still range bound on the chart, but we have higher highs and higher lows showing. This is a good sign, but today must hold above $1.84ish for March contract for this trend to continue.

I am going to go ahead with 1 share or roughly 4% of funds and buy UGAZ at $45.13. I’ll go ahead and place an order to sell this at $47.2. I might be interested in buying 1 more share of UGAZ at the end of the day. I would like to see how the day goes before I speculate on anything other than exiting UGAZ at a gain. I am still holding 89% of my funds in UNG. My only plan with that position is to continue to be patient. Good Luck

Oldinvestor

Morning Update Feb 6, 2020

Looks like weather is still the main priority. It’s like a relief the market is bouncing around on changes in the forecast, yet you don’t really know what’s coming next. I like these ranges to trade a little within the range. Just don’t need to lose sight of the bigger scope here. The price could break out in either direction from this range, and I need to stay prepared for that. I would like to think I’m positioned well enough to make money.

NGH20 on 2hr chart at Tradingview.com

The weather is still giving and taking HDDs and the chart is still holding in the latest range. I really felt like the price could continue up today, but the latest forecast took away 12 HDDs, as usual. I don’t have time to look at other factors. I’m going to have to assume everything else is pretty much the same. It is Thursday, so anything goes. EIA report at 10:30 eastern time.

I’ll be holding on to my 89% of funds in UNG, and looking to buy 1 share of UGAZ back soon. I’m setting a limit to buy 1 share (roughly 4% of funds) of UGAZ at $43.5. If this UGAZ order is filled, I”ll be happy to sell that same share for $46.2 again. I have enough settled funds in my account to buy and sell today. If the natgas prices fall to a new low, I may not be around to see it, but no orders to buy other than the one at $43.5 for now. I don’t want to buy too much UGAZ if I’m not sure, and Thursday with storage that is going to come in lower than the 5 year average is not a good day to take guesses on where the bottom will be. Good luck

Oldinvestor

Morning Update Feb 5, 2020

A major shift in the weather forecast, imagine that. So the weather forecast covers 15 days and there no small grouping of days that shifted warmer. Almost the whole forecast shifted warmer a little, causing a big change in the total number of heating degree days. Overall, the forecast now shows temperatures will be slightly warmer than the 30 year average. That’s enough in this market to send prices back to the bottom of the range.

NGH20 on 1 hr chart at Tradingview.com

Natgas pricing went to the top of my new range and tried, but failed. Did I mention it has been a while since I had to deal with unsettled funds and Good Faith Violations. Not because I have soooo much money, but because I haven’t utilized the full amount of funds in my account since Nov 2017. My 401k account could be worth $1MM and still be required to live by the same rules at $1M account. I’ll be careful of this from now on. There is a two day settlement period I just have to watch out for.

Anyway, I didn’t see any other fundamental reasons for the price to fall, with one exception. LNG still has me on edge. Lets keep this simple. If weather keeps promising cold and then disappoints, only to promise more cold the next few days…. The market should continue close to these ranges. If weather turns unseasonably warm, the price will probably fall further, maybe to $1.75. If LNG export facilities make a statement or just stop flowing gas without a reason, such as maintenance, the same or worse most likely will happen… $1.75 or lower; and probably quickly. With that said, I am again in no rush to switch to UGAZ, only to start losing a ton of money. Not knowing is what makes surprises happen, but we can at least understand what to expect from here.

This morning’s fall was met with a bounce; I don’t feel that bounce will hold up. I’m in a position to be patient, holding UGAZ that I would still like to sell near $46 (today I can sell if I feel the need). I have unsettled funds that I can use to buy UGAZ, but would not be able to sell until tomorrow, so I have to be careful of that.

My current positioning: I’m holding UNG with 89% of my funds with an average of $15.56. I’ve adjusted this and need to explain it soon. I have been working on sheet just for my trades, I’m having a bit of trouble deciding how to present it so I’m easily understood.. . I’ll be holding on to UNG until the market turns or I decide to convert more to UGAZ. I’m holding roughly 4% of my funds in UGAZ at $42.8. With what I sold at a loss, my break-even for UGAZ would be $43.28. As I’m typing this the price is again falling. I have an order in to sell UGAZ at $46.2, I don’t think that’s going to happen today. I’ll be patient to the down side, no plans to buy yet. Good Luck

Oldinvestor

Unsettled Funds

I could sell UGAZ right now but I would commit a Good Faith Violation. I guess I’ll hold off until tomorrow. Well that blows my strategy all to hell. It has been a while since I had to watch out for GFV. I am going to go ahead and sell 4 shares of UNG since I’m allowed to do so. In the future I will be reserving cash for this issue.

Morning Update Feb 4, 2020

To get it out of the way, weather forecasts are showing some cold coming in the next few days that is a guarantee. After the cold, a warming spell then forecast of tremendous cold as usual that will never show up….

Fundamentals appear to still be on the same path. Overproduce until enough wells die or companies start flopping. LNG is most certainly the closest thing to watch right now. Chinese demand and maybe logistics could be interrupted by “the virus”. China does need natgas to for heat; I’m just saying any surprises for LNG will be bearish.

NGH20 on 2hr chart at Tradingview.com

As for the chart, It would seem pricing is still in a range. I mentioned I’ve wanted to shift to trading more noise.

Everything is amplified with UGAZ, so trading noise can be more profitable when trading UGAZ vs UNG. That is, if the trades are placed at the right time. Something I’m not often good at. Selling my 1 share of UGAZ yesterday morning did turn out to be a good choice. I bought that share back at $42.8. It bothers me that I was not able to post either trade on Twitter, where I normally post each trade within minutes of the trade. I will be looking for an alternative to Twitter for posting my trades. This does not mean I will drop Twitter, I just need a way to post trades. I would like to find a plugin for WordPress that I can create special posts that will share to Twitter, email and even SMS if readers want the option.

Anway, on to my thoughts for today. I am holding 95% of funds in UNG still with an average of $15.58. I am also re-positioned in UGAZ with 5% of funds at $42.8. I plan to sell my UGAZ position between $45 and $46, or stop out back at my purchase price. If I am able to get $45 or better for UGAZ, I will also sell 4 shares (roughly 6.5% of my position) of UNG at a loss. By selling the 4 shares of UNG, this will allow me to buy 2 shares of UGAZ on any dip going forward.

I am not interested in reducing UNG beyond 80% holdings for a while still. I will only reduce UNG further if NG prices get closer to $1.75 or $2. There is plenty of time for this. Good Luck

Oldinvestor

Morning Update Feb 3, 2020

Be patient, but not too patient? So fundamentals are boring from my vantage point. I so no major changes. Weather forecasts continue to show some consistent cold, but nothing major. I suppose this could justify $2 gas. But if near term history repeats, these cold signals will not last, at least not to the degree they are being forecasted as currently. With that said, production is still stalling, but the market is still slightly oversupplied. So should I reduce or should I hang on for the ride? Lets look at my positioning.

UNG, including my average position in Webull

My current Average is $15.58 for UNG and I have the 1 purchase of UGAZ at $46.75. The original plan was to layer into UNG until the market turned or I ran out of funds. Part of that same plan was to start converting shares of UNG to UGAZ once I ran out of funds to buy UNG. It appears I am in the midst of a potential turn, though I do not expect much here. Adam Mancini placed a target on NG at $2.04. I like the idea of this target price, and it would be enough to pull UNG above $15.58. However; I don’t agree with this price. I feel the market has had small chances for the price to advance some and has failed every time. With this idea, I feel I should reduce.

Another issue that I have not yet addressed would be settlement period for the account I’m using to trade in. My Webull example account is not a margin account, so I may have to wait for funds to settle before I can buy with unsettled funds. I need to find out what happens when I sell shares. Since the original plan was to wait to buy UGAZ, I’m going to reduce UGAZ now at $46.27.

Account example with Unsettled Cash and Buying Power

So I just sold my UGAZ at a small loss, that’s ok. If the price falls, I’ll get it back, and possibly more. I now know I can sell and re-purchase in the same day. My buying power is equal to what I just sold (unsettled cash), plus my Settled Cash. I should still be careful, because most likely I can buy something today, but cannot sell it today due to Unsettled funds. I should probably write a lesson about this for the education portion of the site.

Anyway, I’m going to continue with the original plan, hang on to UNG, only converting to UGAZ if the price falls to my next mark. Someone asked why $14.4 for my last purchase price of UNG. From the beginning, I wanted to be “All-In” UNG when NG got to $1.85, and $14.4 is roughly the equivalent to $1.85. Why not wait to buy all my UNG at that price? Well because natgas is full of surprises and the price may turn around above or below $1.85. So I set up to layer into UNG, of course with the hopes that I will at least recoup my full investment and then some. Would you look at that, the moment I sell UGAZ, it turns and goes higher. Haha

Back to my target… I believe UNG could get back to $15 this week, and I’ll be happy to reduce back to 80% holdings in UNG at that point. Looks like I’m out of time. duty calls…

I’m now out of UGAZ and will place a limit to sell the last portion of UNG that I bought at $14.4, putting me back to 80% in UNG. The limit will be placed at $14.98. I believe there will be more opportunity to trade the noise, so I want to take a small chance on that happening. If the trend takes over and prices move higher still, I’ll have 80% of my funds in UNG to ride it up. Good Luck

Oldinvestor