So Adam Mancini on Twitter believes we break out for a move up around 2.4 I’m long, so I like this idea, and I wouldn’t make it a habit to bet against Adam. He has very clear and concise goals when it comes to technical training, he’s just damn good at it. That being said, market sentiment is still weak, weather has been bullish so a surprise would be bearish, and oversupply still exists in a big way, hence the market sentiment. That’s a lot of commas momma. I’m just waiting for a significant break in one direction or the other outside of these trend lines. I may pittle around with some small long trades in the range if somehow the wedge doesn’t stay true. Any significant break below the lower trend, I will again add at lower BB and wait for either $2 gas or another significant signal that may come along. So far I’ve been pretty focused on daily charts and daily updates. This will probably remain for a while. I’ve got a guinea pig to help me start working on super basics. We’ll see how that goes.
First up, I’m not feeling the greatest, this always affects my ability to think.
Basically weather is still leaning bullish, Short positioning seems to be still in the mood to be setting records, and Pricing is back down around lows. Production got adjusted up yesterday by PointLogic. They do that every once and while. Basically gas production has been a little higher than what they were expecting. This increase in production is probably the most bearish factor and a key reason for prices failing so far this week. Not to mention, when prices continue to fail to go up during bullish weather forecasts, look out below. If weather is supportive of higher pricing and higher pricing doesn’t come… Weather can’t stay colder than average for long, eventually it will reverse and prices may suffer if they are only holding a range with bullish weather.
I have a couple of trend lines showing on this chart above, this could be tight support today, I’m not counting on it, but I am 27% in $UNG again. I will continue to layer in with each leg lower. Remember $UGAZ will slaughter you in winter with natural decay and roll decay. $UNG will sustain this much much much (3x) bettererer.
I drew a little different trend line pattern for Dec contract. I would be inclined to believe this one. A wedge pattern that I don’t really know what to expect from there. Weather might actually play a role, in either direction. If we continue to be cold for the next couple weeks and are projected to be cold from that point, maybe gas could break out upwardly. In an oversupplied market, cold has to work much harder than people understand. On the flip, if cold gives up and weather is average or warmer than average, gas could break down, rubbing on that lower BB. I’m still a believer in sub $2 gas and bankruptcies, and all that goes along with this… Including a huge swing in S/D and pricing if it comes to that. Oil is beginning to suffer, maybe we’ll get a repeat of 2014/15/16. Now I’m just rambling… I’ll add again if we reach the lower BB on Dec contract and I’ll reduce back to 20% if we get to that downward sloping trend line.
Gonna make this quick. Looks like we bounced from 38% Fibo yesterday, good area to reduce slightly. Today has a pretty tall upper wick, it’s not looking good for a breakout at this point. Weather is still predicting cold, LNG showing to hit a new high, but EIA confirmed the market still far oversupplied to get very excited. Since that last barrier was not broken, no “off to the races” signal for bulls. So first thought here is, we creep back down and re-test new lows, possibly 2.1 for Nov contract if it doesn’t end first. I call it boring friday, because tomorrow is shaping up to be just that.
And that’s why I’m in $UNG. We didn’t break down the support zone I last posted. At the time I didn’t have a upward range. Seems to be all about the moving averages today. 20EMA has been passed up, 50 and 75 SMA are converging (which means nothing to me), and are the next area of resistance. My Fibo placement is still from late Aug to mid Sept. That should be updated coming down, not going up.
Alright; with Fibo updated, not much has changed. Resistance here is strong, waiting to see if we break through. of course I’ve layered out some already with the hopes we get to 20.5 today on UNG and I can dump most of the rest. If we break down here, I’m now with 24% of my funds in UNG; I’d say I’m positioned well. i can always dump at even if we break down.
- Short positioning almost hit the peak we were at 2 months ago
- Price is super low!
- Bounced right off of support area
- That unpredictable bitch, Mother Nature showed up with a lot of TDDs
- Technically we face resistance…
- The market is Hurculeanly oversupplied
Last shot here, NG1 continuous chart; we’ve broken through 20EMA, 50 SMA and face 75SMA and 38% Fibo retracement very soon. This is not so far off from Dec contract. My thoughts on all this does not change looking from one chart to the other. I’m torn here, technically we face resistance, while weather is super bullish. It is Wednesday (which in a bullish week, is bullish more than not), we have momentum at our backs and it’s gonna be cold.
With all that said, I want to say today we go one more leg higher, at least test a new high for the week. If we break through today and EIA doesn’t smash our hopes and dreams tomorrow, we may run on up. Oh, and those weather predictors must remain cold. With short covering being a potential, the chances are actually good that if we break out here, we take off like a rocket. I’m not good at picking a target, but I’d say these moving averages could be good indicators of the breakout and moving on up to 120SMA (2.63ish December).
May it be a wonderful Wednesday. Cheers!
Doing my best to muck up this chart. Technical analysis is not my strong point, but I am learning slowly. Seems like I successfully called for a bear flag last week, week before? Would you look at that…. A bear flag. So for my further bearish argument I have an if. I have drawn all over this Dec contract chart and decided that IF we break down either today or next week from the current price of…. 2.41ish, then weak support may exist around 2.34. Once the price smashed through that number next week we head straight for 2.20 – 2.23. Granted, we head down quickly and catch up to lower BB while running into major trendline down around that area.
That being said, I’m now 33% or so in $UNG and will remain so with an average just below $20. I have a bad habit of falling knives and such around this time of year. I like to think I’m still doing it wrong, I’m just wearing thicker gloves this go around. In years past I’d have been all in and squirming, looking for a way out, not wanting to take a major loss and eventually doing so. I’m all of 2.1% or so down on my account today, I’ll take it for now.
That being said, what’s to turn this thing and make it go up? Hell if I know…
What we do know:
- The price is pretty low, but has a couple legs left
- Managed money positions are approaching record shorts again for the year (short sided positions are quick to cover)
- Producers have already said they are cutting back on new activities (hearing little bits all this year)
- Long term weather is UNPREDICTABLE!
- NG even in 2015 is full of bear flags to scrape a little in and keep averages low
- UNG never recovers from Oct 2015 prices, but if kept manageable, can be easily worked out of.
- UGAZ decays into oblivion, unless you plan to roll it around a lot, just don’t, not yet…
I’ve been sick with what seems to be a cold forever now, beginning to think it’s Mononucleosis. To my 0 readers so far, I’m sorry I haven’t posted much as of yet, also for the low quality of this post. I reserve the right to be completely wrong and talk in circles. Have a great weekend.
EIA puts out a 112 and gas still ends higher. I’m thinking short covering here. The timing of the day seems odd to just be a move higher. Some shorts are probably being more cautious coming off of a big run down with so far, what seems to be straight down.
Seems we had broke through every technical level of support. My first take on this is 50day moving average would hold the keys here, but tomorrow is friday. I’ve learned gas is always full of surprises, like shifting opinion over a weekend. I’m still going with the idea 50 day will be resistance, but i remain cautiously long. Being positioned with 17% of my account in UNG, I can manage about any drop from here and scrape a little in if we break through the 50 day. If new lows are created next week, i say let it fall to $2.20, reevaluate and watch for $2 gas
For the last few years I’ve heard this argument about South Central Salt Storage. South Central is a region of the US for Natgas storage and Salt would narrow it down even closer to salt caverns. The south is a dominant area for Natgas flow and any disruption in storage could potentially cause a disruption for much more than just this single region. As we’ve seen in the Permian lately, Natgas pipeline infrastructure capacity can become limited. So the argument goes, Supply/Demand has grown substantially in the last few years yet storage capacity remains the same. Even though production has surpassed (what I would call) structural demand by upwards of 3Bcf/d lately, Salt storage is presently 48% full.
We see that salt is hardly keeping up with filling capacity when compared to other regions of the US. Back to the argument that it is not filling enough; therefore come winter, this region of storage could run out. When comparing supply and demand on the national level, this year is beginning to look like we will not possibly run out of storage, even in the midst of a cold winter. If one of these 7 major regions were to run out of gas, we would have that similar problem that Permian is having right now with getting rid of supply. There just is not enough pipeline capacity in all directions to move gas where we want when we want, which is the point of having enough capacity in each region. Granted, 5 year minimum for Salt storage has not dropped below 108Bcf, the last time this region experienced much in the way of a cold winter was 2014. At that time supply and demand were both much lower and the infrastructure at that time may have been more up to the task of moving gas more on demand.
I’m going to end this by sharing an article written by a reservoir engineer, posted on Oilprice.com Dwayne Purvis, makes a strong argument for the need for greater storage capacity. This is a test article so expect many mistakes and biased opinions.
Testing posting a chart from Desktop.
The idea here is UNG as well as NGX19 is at a support area. Previous close is at trendline, as well as 61.8% Fib. UNG has already crossed below 50day SMA and I fully expect it to continue lower… Test complete