Loading ...NATGAS Part II
Huge supply risk and bullish weather updates. I am long NG futures and will be looking at the Feb/March spread (a whopping 0.200 spread difference) tonight to capture more of this backwardation environment with reduced risk/margin.
The supply risk is unprecedented. And when I say unprecedented, I mean the largest drop in recorded history at this time of year.
As we enter a new solar grand minimum, we could be looking at a bigger picture here: https://nextgrandminimum.wordpress.com/
Suggest watching this video. There is something happening in agriculture right now as well: https://www.youtube.com/watch?v=rp1NJ0Yf_9M
Thanks for this. I think this move might catch a lot of people by surprise, and flat-footed – out of this market or short. I’d mentioned in a comment on Graddhy’s post that there’s an entire region (Montney – Alberta and BC) that’s being crushed into capitulation right now, largely on low gas prices and perceived political risk, I suspect there’s great upside there. But you made me realize that just having a position in the commodity itself is probably a good idea at this time.
Indeed it is. The minimum target is 3.400 based on the H/S analysis… but I think there is room for much higher to 3.8/3.9 area.
I just checked CME, and the FEB/MAR calendar spread is being offered at a margin rate of $580/ea. That is compared to being long the FEB contract outright at $1800/ea.
The futures curve is in backwardation to the May contract: http://www.cmegroup.com/trading/energy/natural-gas/natural-gas.html
Seasonality for NG usually starts in FEB and ends in JUNE: http://charts.equityclock.com/natural-gas-futures-ng-seasonal-chart
It seems being long NG right now given the volume breakout and backwardation until APR/MAY is a good trade right now, and adding along the 4HR dips.
Major trendlines to look out for coming up (log scale).
https://www.tradingview.com/x/4N2UDmsS/
Weekly:
https://www.tradingview.com/x/0lLVVuKC/
Yucky gap down… still above neckline so I added more and got into the calendar spread. These gaps usually fill by the London session.
Northstar : Could you comment on that weather video in Mort’s Post ?