Oh my! ….Could it actually be happening?…..
Good Lord,….it has taken forever, a crapload of capital, and a few facelifts,……but finally, weve arrived at the major and midterm cycle uptrend lines which should be powerful catalysts that arent quite so easy to just turn on their heads.
But the way the market was careening downward at a million miles per hour once the shorts got control again, and drove out every single long player(except probably me….sheesh!), …….I wasn’t particularly confident that the market was going to respect the support of the “V” wedge where the major updraft trendline met the major downtrend line, as the momentum was formidable. But then, its like someone found the brake pedal, and more recently, seems to have found the reverse gear! But what a screech to a standstill at (just coincidentally) the very intersection of a “whole host of technical convergences” and the completion of an almost perfect head and shoulders that put us all the way back down here.
Geez,….. if I thought the market could gain that kind of downward momentum, even if just in the interum, Id have sold my position up toward the top end of the rally and would have “impatiently” awaited the market’s making a somewhat more constructive move to a bullish disposition than I did. …… Instead, Ive been buying all the way down, watching money disappear like its sitting next to a vacuum with a fresh bag, waiting for the support to come into market. Well, my wife has divorced me. My kids think Im a lunatic, and my dog now pees on my leg whenever Im not looking.! ….. Of course they all love me to death when the money is flowing…..ugh!
And just as I ran out of my last six pack of Red Bulls and Jack, a miracle happenned! …… The parachute opened!…..Oy Vey! as they say! Could it be that an actual market bottom is forming right where its supposed to at the absolute bottom of where its technically supposed to? Well,… weve spent almost two weeks down in this neighborhood now, have put in a double bottom in the Henry Hub NG, and have started developing a “ series” of bullish chart patterns, infering that this “ bottom” might actul have some legitimacy to it!
Now, I hate to count my Benjamins before they’re deposited, but all things considered, Im longer than Ive ever been, and the October 7th seasonal approximate reversal date for Gas is tomorrow, and of course falls right in line with the beginning of these new major and mid cycle bullish trend lines. How convenient. I truly believe this is “ the bottom”……. (wish Id believed the market couldve gotten itself all the way back down here)……... But Cest la vie….. If we all had a crystal ball,…. we could get rid of these crappy snow globes weve been using!
But in all seriousness, with everything that’s going on in the world today, and the completely skewed supply/demand dynamic thats set up with the U.S, and Europe right now, and the cooler weather fast approaching, with few “ longs left to squeeze”, I think the shorts are starting to pack it in for the time being, as now we’re simply at a price level quite frankly, where we could literally start ripping higher day after day ( with a fewnormal pullbacks) for weeks.
Additionally, it becomes a treacherous game for the shorts down here at $7.00 Mmbtu at this “ particular point in time” . Frankly I thought they were, nuts at $8.00 Mmbtu; As I thought more traders would front run the market. But after the routing the shorts gave the long players in the market,…… even the tyrpical price differential ratios between the Henry Hub Front month, UNG, and its leveraged counterpart BOIL, arent even reflecting their normal 1:1% ratio between Henry Hub and UNG, and the 2:1% ratio between BOIL & UNG. The ratios on the upside have been tepid at best, indicating that the bulls got trounced to the point that even the most bullish, got killed in this last downturn, and are tepid in their willingness to step back in and take a position,……as they too have wives, dogs and children.
The example below is a prime example of my next point. As sometimes UNG and BOIL are quite literally inverted the wrong way “ratio wise” ( makes for a great arbitrage!)……… But, holy cow, sometimes November Gas will be up 2.25%, and UNG which should be largely identical, will be up .75% with BOIL UP .81% . This is not typical. If Henry hub is up 2.25%, UNG should be up almost an identical amount (2.25%), and BOIL should be up about double that (4.50%) . So this example below is just what I happened to snap off at the moment. but at times, I find myself sitting here going “For Christmas sake!” let’s go people!
But the out of whack differentials show two things.…. A still anemic supply of bulls willing to jump in and push the market as well as the ratios; and,….. with the quick micro spikes down at he bottom end of the chart over the last two weeks that have produced some these momentary downward spikes as the shorts have tried to push the market, few buyers are stepping in front of any new down leg that the shorts are trying to push. Its kind of like the longs are leaving the shorts there to play with themselves. Thatshow you get these spikey bottoms, priorto buyers firmly stepping in. At the same time, Institutions have been on balance buyers over the last two weeks. And those that are getting long, are staying long.
These ratios will show more normal adherence to their normal ratios as traders become more comfortable with the notion that its time to get, and stay long again. And then of course those ratios will begin to show occassional premiums as bulls push the market higher and higher as the momentum gets rolling. But if your waiting for that onfirmation to become blatantly apparent before you jump in, you may be waiting for the market to have already moved by $1.00 or more/ Mmbtu where of course your risk profile changes quite a bit……..Look at price.
So I truly believe we a establishing a credible bottom here. And given how close to colder weather, the reopening of Freeport etc., not to mention the increasingly unstable situation in Europe, I am more bullish now, with more conviction (and the huge position to back it up) than I have ever been.
Like I have long said,……this is a “timed trade”(theough at least year end) ,……not a one time, “ lets see what happens trade”. The fundamentals are now starting to take a more dominant position in the forward looking price with every day that we move forward. With that said,…..you all know where Im stand…….. and for those wondering where Ive been…..at the bar!
Ill share more regarding current charts, technicals and other fundamental tidbits later on tonight or tomorrow,……
Right now I have to put on a new pair of trousers again because spike thought my leg would make a good fire hydrant …..damn dog!
Right now I have to put on a new pair of trousers again because spike thought my leg would make a good fire hydrant …..damn dog!
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