Subtle Shift in Natural Gas Money Flows

The bullish setup in Natural Gas was first identified and discussed in A contrarian makes another call – this time, natural gas on April 26th. There's been a lot of volatility in natural gas but limited upside. The fact that commercial traders aggressively cut their long position into the strength limited the advance at least for now.

The direction of money flows during the first reaction after the initial up thrust the ended in June will determine the sustainability of the natural gas rally. As I have said to others in reference to natural gas, connected money must buy into the dip to perpetuate the rally.

Commercial traders (connected money), while not statistically significant, are nibbling (buying) again while the nonreportables (retail money) are selling. A few more weeks of this type of action could produce another up leg in natural gas.

Natural Gas ETF and the Commercial Traders COT Futures and Options Stochastic Weighted Average of Net Long As A % of Open Interest:


Natural Gas ETF and the Nonreportable Traders COT Futures and Options Stochastic Weighted Average of Net Long As A % of Open Interest: