Posting from my phone this morning, forgive me if I leave something out.
First thing, I sold out of UNG and have not chosen to re-enter, yet anyway. I wanted to enter and hold DGAZ but it felt rushed so did not try to get that posted. Anyway, the move late in the day, pit close most would say, NG turned and dumped. Weather was preached again. Weather always does its part to buck the trend, but this 5c move was profit taking at the end of a tremendous run.
This morning, prices have fallen a bit more, i would say a GFS (weather forecast) update might actually be responsible this time. GFS does this, gets ahead of itself, then corrects, what fun!
Daily chart looks to have a small wedge look to it, but i lack the confindence to choose a direction at this point.
That being said, the market is still oversupplied, I’m going to repeat that a lot, evetually it should come with some news of bankrupt operators (producers). Over the last year it has spelled out cuts in capex. I may or may not be near the market today, so I’m out and happy. It was a good first win for my “example account”. I’m really more interested in the market testing $2.3 or $2.5 on Jan contract.
First up, I put 9% of my funds in UNG late yesterday (posted on twitter when I made the trade) and I’m glad I did, looks like we have a little breathing room this morning. A stop right now would be back at my entry of $17.92.
So weather does not always set the tone, but this time I believe it has. Of course it would not have been possible without managed money positioning and price where they currently set.
Managed Money is showing a substantial increases in short positioning. This data shown only runs through Tuesday Nov 19, 2019, the report may have not been updated this last Friday. This leaves me to assume that positioning has swung much further to the short side, leaving the door open to a rebound in pricing.
The chart is showing what seems to be a clear signal that the market wants to go up from here. There is still room to get in UNG or possibly even UGAZ if you must.
Back to weather; both forecasts are showing a bit of cold coming in to the right locations to make for higher HDDs. Both weather models are in agreement as of right now, so all is well for the next 10 minutes anyway 😉
I’m still not so good at picking how far the price can travel, my guess is between $2.5 and $2.56 on Jan contract. This would be around $19.2 and $19.7 on UNG. I’ll be content with $19.2. Again, I’m keeping my stop at $17.92 for now
Well great news! NG is even more oversupplied now. Well that’s great news if you like this ongoing trend… Production has apparently hit a new high over the weekend. This is not an unusual for production to add during the winter season, but being that the market is already oversupplied…. The market appears to be on track to match winter of 2015/16. I believe this will spill into summer of 2020 now, whereas 2016 was a recovery year.
In 2015, oil and gas were more in sync with the oversupply theme. This caused more of a crash in rig count; whereas, now the rig counts are falling but at a much slower pace. Looking at the EIA Monthly Drilling Report, we see drilling rigs for most areas still not at lows seen in 2016. Appalachia region does seem to be tapering off quickly, but still not at lows. Any of the oil producing regions, such as Permian are no where near rig count lows, thanks to oil prices helping those companies continue to produce. This is not a strong theory, but just the figures shown in the drilling report tell me that production is going to continue on, prices will continue to fall, this will spill into next summer.
As for right now. Prices dropped hard Friday. This fall seemed a bit overdone to me, but it is what it is.
Daily chart showing a bounce and if we hold, we’ll go higher.
The 2 hr chart looks to be trending up still, with a slight pull-back.
I should mention I was short at H/J spread and I’m covering that now around 8c. This is in hopes the spread will pop back up above 10c-15c. I want to go long UNG here with a stop at Friday’s low, but I’m just not feeling it. I will check periodically today to see if I feel more confident in the trade. The market is just so oversupplied.
Posting from my phone this morning. Looks like it was best to hold off on that UNG position after all. Weather forecasts are confirming temps are going to swing above average and prices are responding accordingly. The market wants to go lower. It has all year and has run further down with any excuse to do so.
I’ll be waiting for a better reason to get back into UNG next week. Hope the weekend treats everyone well
With my limited knowledge of technical analysis, this looks like a turn. I still don’t have high confidence since both weather models are showing weakness in the forecast. This could be short positioning covering before Thanksgiving, isn’t that a thing? If I were in charge of millions of dollars that belonged to other people (especially if I were ahead for the year), I’d want to cover and feel the relief knowing I can go spend time with my family and not even have to think about the market. Also I still believe new short positions will be quick to take profits. Why else would the market bounce on a lack of cold in the forecast?
That being said, I’m going to keep my paranoid stance on the UNG position I took yesterday afternoon. I will keep a mental stop at my purchase price of $19.32 until market open and place a market stop at that price.
Gonna keep my message quick today. So that’s it, stay long with a stop today and be thankful if it doesn’t stop out. If UNG gets close to $20, I’ll consider selling. Let’s see what happens.