Herd Capitulation in Natural Gas?

Could it be that the specs (hedge funds) and retail funds are being setup by the media tools of the operators? Those that recognize the tools play the game. Those that cannot recognize them also play but not very long.

Connect money continues to increase their net long positions as the headlines provide the intended ‘perspective’ for the weak hands.

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


While retail money remains relative bullish, their recent selling represents what I characterize as herd capitulation. In other words, how can I remain bullish when the experts/pros/talking heads remain so bearish? Any retail capitulation on the long side as connected money quietly repositions only sweetens the pot.

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


If there’s a technical trigger on this one, watch out.

Headline: Hedge Funds Bet Gas Will Fall in Warm New Year: Energy Markets

Hedge funds raised bearish natural gas bets by the most since October on forecasts that higher- than-normal temperatures in the first weeks of the New Year will reduce demand for the heating fuel.

The funds and other large speculators cut net-long positions, or wagers on rising prices, by 35 percent in the seven days ended Dec. 21, according to the Commodity Futures Trading Commission’s weekly Commitments of Traders report. It was the largest drop since Oct. 12.

Source: businessweek.com