Not going long just yet… First off the 2hr chart looks too good to go against.
Clearly in a down trend, and why not, tis the season. Maybe we get a vomit day occurrence in the next couple weeks. I should probably explain that some day. So the weather forecasts are not filling people with holiday cheer nor are they giving traders a reason to hold a long position. Not yet anyway. Price does matter, but I’ve learned it matters less in the face of a solid winter down/up trend. Winter trading doesn’t stay range bound based on price, it’s more about indecision on which way the next wave is.
If you got in DGAZ yesterday and stayed, good for you, wow I missed out. If you’re still holding DGAZ, even better I would let it keep going a bit. Of course I’m not interested in entering now, so I’ll wait for what I think it s a good place to go long. I’ll probably be too early, so be aware of that.
Price is still important, so if we get to $2.5 Jan gas, that’s a big mental number. This area has my attention for now.
As far as daily chart goes, the price has broken through a strong trendline area, and touching the lower BB. I should add that on Aug 5, the price bottomed at $2.475. This would strengthen the argument for chaos in this range.
Again, If you’re short here, great work. If you’re ready to go long, be patient; If you gotta scratch that itch, get UNG as there is plenty of money to be lost in UNG without the decay of UGAZ. You can always switch to UGAZ when the timing is better, like waiting for the turn to happen. Be patient.
Weather. Everyone Friday seemed to be talking about weather, and maybe all weekend. I now see why jackasses like to say NG has nothing to do with weather. If not for any other reason than to get everyone riled up. So Friday… Dec pricing crossed above the upper line of my channel and then fell and closed out he day below that upper line. Being that it was Friday, I was distracted and I missed it. This happens.
From what I could tell weather forecasts shift a little more bullish over the weekend and it was suspected the market might give us a positive response. It is not surprising to see we got a gap down and prices continued to fall from there. Now what?
Seems we are still forming the right shoulder of a head and shoulder pattern. The lower green line that goes across the screen could be considered the neckline and the price has fallen below there. Are we off to $2.45ish? I can’t say, but any weakness in the market (especially weakness in weather forecast) and prices should fall.
There are a couple of areas of support on the daily chart. Once at $2.59 and I would say strong support at $2.57. This is 75MA and the low for the last few weeks. I would almost be interested in buying DGAZ now at $117 with a stop at say $115. I don’t feel very strongly about this so I’m staying out today. Thanks for listening.
Same thing, different day. The market is still oversupplied, winter is still “on the average”, the trend is on a slow grind down. The market wants to fall.
Daily chart shows a couple of areas of support, but winter trading momentum has appeared to have taken over once again. We look to be on target for $2.5, below that I don’t know. That may be the point at which I consider going long.
Sorry for the short message, today just feels like a continuation of the week. Since we’ve had such a strong move this week, I would like to think we will get a bump in the road at some point soon. It could happen at any moment, but tomorrow is most likely.
I will be watching around 9am Est. The market gets stirred up around that time. If we take off to $120 today, I will cut it off and sell out. That will be biggest move of the year and I’m blessed to achieve it. I will also sell out at $109 today and call it a great week.
This is the current forecast 6 hours from now. We see the lines move up under AK (Alaska) and the down across the midwest and sharply swoop down into the Northeastern US. This is the perfect pattern for a spike in NG demand. Since this is the forecast for 6 hours from now, it’s pretty much guaranteed to happen. I believe in 10 day forecast, beyond that it’s an educated guess, but still about as much a guess as truth.
This is the 120 hour or 5 days out, you can see the lines are flattening out and no more cold being slung down into the Northeastern US. So cold temps in high population areas will subside, people will not burn as much gas to stay warm and consumption that had skyrocketed will drop back to about average use.
I should confess I was looking at NG1 and thinking gas had a ways to go before reaching the 20EMA. Looking at Dec contract without the influence of NG1, the price has already crossed 20 EMA and touched the 50MA on the daily chart. Being that I’m a bit green to technicals, I will look into further the use of NG1, which shows Nov contract until expiration, then Dec. For now I’m going to stick with displaying each contract and not use NG1 for short term technicals.
Moving on… the 2hr chart is showing some strength. I’d say the market has another hour to wake up and really give us a direction. I believe overall the price of NG will continue down this week, but not at the same pace as yesterday. There will be some bumps along the way, as normally is the case. The NG market is still far over supplied, weather forecasts haven’t given a signal to get excited, and the trend is simply down right now. I remain with 3.5% of my funds in DGAZ with a stop at $105. I think this is a bit close, but I don’t want to lose that profit so $105 it shall remain.
So I was off a bit with the intersection of 20EMA and NG1 price falling.
I misjudged where NGZ19 would meed up with 20 EMA on the daily chart. This is great, there is roughly 7 more cents for Z19 to fall, potentially sending DGAZ up another $7-$8. I chose to reduce 50% of my position first thing this morning at $107, this leaves 3.5% still in $DGAZ.
This chart hasn’t been updated yet, but it will show further weakening in HDDs, which in turn is helping drive the price down. Basically that cold cluster over the Northeast US is going to hit us hard, this week and by next week we should be seeing more average weather. Weather is never average, but you catch my drift.
Weather is my main reason for holding short into the weekend, but this is my reason for confidence in a Sunday gap down. I probably should have explained this friday afternoon when this report came out. Nonetheless; I did mention on twitter I would be holding. Short positioning had decrease drastically with this report, showing there is plenty of new shorts to be added. Also…
The two hour chart seemed to indicate the market was looking for reasons to drop. Thursday’s EIA report was strong and on or better than most estimates, yet NG did not breakout and hold and up trend pattern.
So culmination of weather, short positioning and 2 hr, led me to have confidence in the short side. Today’s Daily chart shows we have resistance around $2.6 with 20 EMA. I’ll stick with this and place a stop at $105 on DGAZ for the day. I want to keep the gains I have so this stop is close, it could get taken. I’m good with that, the % gain this time around has been closer to 1% on my account so I’m happy to place a close stop.
Keep in mind I may come back and update this before open Sunday. Any extra notes I’ll extend onto the end of the post.
Friday’s weather updates shows some level of strength, maybe helping prices hold where they are. DGAZ didn’t get anywhere near $106, which may be a good thing because I would have sold off. Being back at 7% through the weekend. If the cold shown in the northeast US breaks apart, we could see gas gap back to $2.7ish.
I feel that shorts will be slow to re-enter the market here, and short positioning may not get back to the extremes we’ve seen. That being said, there is room for new shorts to drive the price lower once again.
If we get anywhere near $106 on Monday, I’ll sell 50% of my position there. We’ll know more about the market and weather on Monday and I’ll make plans for the other half of the position at that time. It is possible I sell the entire position or hold for and even better price, for now this is the plan.
I’m sharing NGZ19 from my Schwab account today, side-by-side of 2hr and daily charts. You can see that 2 hr is approaching upper BB. You can also see Dec contract has failed so far to reach upper BB. I took a small amount of my position of DGAZ off yesterday and looks like that was ideal. I’m happy to add that back in this morning at $94. I will try and keep an eye on this and get out if DGAZ begins to fall here. Weather is proving to be a unpredictable as usual. Cold concentration over the Northeast US is still holding true… With this week overall and yesterdays failure to break out going up, the market is ready to tumble once again.
Any bearish activity in the face of bullish fundamentals should be your first indicator; once those fundamentals turn bearish, it’s off to the races. No stops today, I’m hanging on for the ride from here.
Lets fade the gap. I’m not counting on it today, but maybe by tomorrow. DGAZ is hanging in there nicely. If EIA is not overly bullish today, my hope is DGAZ gets to $106+ by tomorrow. Just have to wait a few more hours and see.
Weather is giving a look at more normal temperatures. Daily chart looks good, 2 hour chart, not so good. If we can break down today, should at least get that red line and meet the 20EMA.
2hr chart showing some support, which you might exit here to try for a better position. I will be holding DGAZ with the same stop at $85, this time I’m putting the stop on my entire position. I will be careful around EIA report time, 10:30am Eastern time. I may remove the stop during the report and manage it manually. I will post if I think I should dump it. I’m hoping if DGAZ bounces, we don’t get near $85 so I don’t have to make a hard decision. We’ll see how it goes.
Zooming out to the weekly chart, we can see gas pegging multiple MA here. The price gapped higher, and this is a common theme for falling back to “fade the gap”. I don’t have a lot of confidence that gas will turn around here. I am going to put a lot of emphasis on weather. Watching weather in relation to NG over that last couple years, it seems the hardest thing to occur is also the most desirable. When cold comes down across Canada and hits the Northeastern US. It has been rare to occur and seems impossible to linger in that one location for long, yet the cold remains in the forecast.
Going off of my twitter feed here, I bought DGAZ at $117.8 with 2% of funds, and didn’t take my own advice of placing a stop at $114.5. I added to DGAZ yesterday at I believe $88.8 with 5% of funds. This is not an ideal trade and I should consider another stop (at least on the 5%) at $85-$86 on DGAZ. I’ll leave it at that. If we do head back down, I’ll switch back to daily chart for potential support areas of NG.
It looks as though gas is heading for new lows. Fundamentals aside, this is a clear indication the market wants to go back down. Since we are coming up on the weekend, I don’t want to get carried away with taking a new position in DGAZ. I like 3% here. This is a very small position. A lot can happen over the weekend. Weather could shift cold again; this is not highly likely so I’ll take a short position today. Short meaning I’m going to buy DGAZ.
Now for a look at 2 hour chart. We are rubbing on the lower BB (Bollinger Band). I’d like to see some pull back, maybe back to $118 on DGAZ to buy. Another thought would be to take 1% now, and buy more if DGAZ falls some. I think placing a stop at 114.5 would be a good choice. Since we don’t have a lot riding on this trade, we just won’t worry about it.
I personally am going to wait. I may get busy and miss out, but 5 min chart is trending higher. I’ll post a trade alert if I make a move.