Morning Update Jan 6, 2020

After a horrible couple of weeks of demand due to weather, we are getting a cold shot, and potentially a little more. The cold that is upon us right now, when 11-15 days away, was forecasted to be much colder. Rather it was suppose to be cold in the areas that count. So the current forecast can obviously change. The only time I really count on trading based on weather is when the forecast shows such an extreme, it cannot possibly get any more lopsided. Not only that, but the market has to be in good response to the weather at the same time. Speaking of which.

NG1 on 2hr chart at Tradingview.com

The weather seems to be predicting some cold and it currently cold. Also the pricing of NG is back up around the upper trend line. Weather is now priced in, so the next forecast better have another (colder) update or prices may tumble on that. Prices may tumble anyway. This week is supposed to be the coldest week of the winter season HDD wise. Winter demand is at the highest point for the 5 year average, this week. That’s just another bearish hurdle to overcome if the storage draw reported next week doesn’t compare with the 5 year average.

After all that negativity, I gotta go back to my anchor point. DCOT positioning.

DCOT positioning as of Dec 24, 2019 at RonHenergy.com

This is the latest report of managed money; there should be a new one today. Normally released on Fridays, the Dec 31 report is most likely delayed due to New Years holiday.

I’m sticking to my guns on this one, short positioning is still near record highs and longs are building. I’m going to put that broken record on here and say that short sided trades are hard to come by, they are all in the market. There isn’t many big traders to push NG prices lower. At the same time, long positions build and reduce slowly, and with small positions. With these small positions, they are more capable of riding out a large dip if such an occurrence happens. There is strength in the long side, there is just no reason yet to push prices higher in the immediate. If you’re like me, a turn around in the market will always take too long, I’ve come to accept it.

I’m going to stop there. I know that’s not any new info, there’s not much of a change. On a positive, LNG pipe flows did reach a new high over the weekend.

I’m still holding 40% of my funds in UNG. I will again place an order to sell 25% (roughly 10% of my funds) at $17.12 (my average). Otherwise I will be try to stay ready to add to my position below $16.3. As a note, i could have added last week, but when I was looking at the price, the time was something like 6am est time. I can trade at this time, but most people cannot, so know I will not make any trades before 7 am est time, when pre-market begins for most accounts.

Oldinvestor

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