Morning Update – March 19, 2020

Fundamentals that I’m seeing aren’t showing any changes yet. Not that I can notice. I’m not paying tons of money for very detailed info, but it’s good enough for me to speculate.

Valor Analytics made a comment on Twitter yesterday. I can’t remember the wording exactly, but it along these lines: “Natgas will be bullish at $1.5 with Oil in the 20s”.

This one statement says it all. I still fully expect demand destruction to play in, and I think the first shock of that idea hit the market yesterday and I didn’t capitalize on the move. UNG got almost to $12. I mentioned $1.58 for prompt, which I’m showing around $12. So my numbers are off a little, and had I set a limit to buy at $12.05, I might not had gotten in. None the less, I’m adjusting my strategy.

I still believe Oil and Gas are both going to seek out new lows. I can’t say for sure, and I’m already holding some of both UNG and USO. So the change in my strategy sill be to try and add every 50c lower in UNG. I know it sounds like a ridiculous idea, but since I’ve been blessed to still be working. I want to try and catch a little of every move to $1.5. I’m currently 35% in and I’ve decided I’ll dial it up to 75% in at $1.5 gas. I have 40% to play with. That’s roughly $400 in my example account. Current prompt pricing is $1.65, but I’m going to start referencing NGK20 at $1.70 right now.

So…. If I space evenly my funds to $1.50 from $1.70, near

$1.70 = $13 UNG

$1.50 = $11.50 UNG

I’ll use the following method

Layering method if Gas falls toward $1.5 NGK20

I’m showing $400 to be invested every 1% lower in price of UNG, and I’ll invest roughly 7% each layer. This sheet is not highly accurate since 7% is not exactly 2 shares. Either way, this sheet will keep me from spending too much, too soon.

wow, I just saw a headline, flights from China will resume to London? This virus that has all but been deemed the end of the world, and London is just getting started with dealing with it. Then China is going to let their people head on over to London. Round 1 hasn’t even started for most countries; this just gives support to the idea China let this thing out intentionally to cull the herd and they are leading them to slaughter by opening travel outside of their own country again. I’m not a doomsday prepper, but I look at the way governments are prepping for this virus and think that is a bad move to let people enter or leave any country right now.

so my guideline above is good enough to get me started with UNG. I’m not going to get too excited about USO right now. My average is $5.55 and If it goes up, great, if it goes down substantially again, I’ll buy a couple more shares. I really don’t see oil dipping $1 below $20. That’ is just insane. People will find a way to store oil in their back yards if prices stay down. I’ll look into physical contracts for delivery. At this point it would cost more for the application and requirements to store it than the oil itself. Even at $20/bbl. I’d be happy to drive an old diesel truck for the next 20 years if I could store $20 oil in my backyard right now.

Again, I’m going to set some limit purchase…. hmmm I have a pre-market order to buy UNG right now at $12.98 with more than 100 shares in my other account and it’s not going through…. hmm, just bought 2 shares in Webull at $13, guess that gets me started on my layering. I’m going to wait a little to see how the market “wakes up”.

The sheet above, again, is just a guideline. I may place some limits to buy each layer as the sheet says, but if I have time to watch, I’ll see if some of these layers get in at a better deal that what the sheet says. If the price is falling, there is no reason to just bid into UNG at a layer just based on that sheet. I still want to get the best deal possible, I just don’t want to miss out like yesterday. You could argue I should just give myself a little more room with each layer and wait for a better deal. Then I would argue that I was going to do that yesterday and I missed out. Do you like how I am torn on this approach. I think something like this is more appropriate.

Start buying at $13, and layer in with each 3% drop in price. Invest 15% with each layer.

Here I”m letting the price move a little more and investing more with each layer. This is more what i wish to do. If I miss buying 1 more layer, I’ll live with that.

I bought 2 shares at $13. I’m going to leave it at that and set a limit to buy UNG at $12.61 with 5 shares, and be patient on the rest. If I get busy at work and the market is falling, I may place the next layer to buy a little lower that $12.23 just to see if it will take lower and check as soon as possible.

Schwab still showing my other order “pending cancel” It must be their turn to have trouble with the traffic to through their platforms now.

Holy shitzleberries, $12.61 just took. I’m going to publish this now, and I’m going to be patient on the next few layers.

You’ve been getting the play-by-play, I need to slow down. I’m still planning to follow my last posted “trade schedule” above. Remember, all it does is keep me from buying too soon. I can always wait longer, which is what I’m doing now.

I’m currently 44% in with an average of $13.89 in UNG. I’ll go ahead and set 10% to buy at $12. This volatile period is chaotic and emotional. But being just that, it will lead to wild swings in both directions that should be easy to capitalize on with smaller amounts invested than usual. For now, I’m only going to add the 10% at $12 and wait to see what else happens. The sheet says 15% on it, but that is based on $400 in the account, so ignore that. Wow, I have a lot work to do to prepare this site to be an example to others.

Ok, be patient; don’t spend too much money (especially that which you can’t afford to lose right now); take care of yourselves and your families; be patient again. And stay away from SPXL still. Good Luck