COT Pulse Natural Gas

Hi Eric,
Can you give use an update on what's happening in the natural gas market, it seems to be pretty dire. A rally until July is usually common around this time of the year, but it seems it will be very weak and could set the stage for more decline going into September. What do you think? Do we simply give up on this wretched commodity or are you holding here?
Mark

Hi Mark,

Markets can be a game of frustration. We’ve all been there. NG is neither or your friend or enemy.

(1) Clear the mind,
(2) listen to the message of the tape (market),
(3) and let the market come to you.

A tradable or sustainable bottom tends to be preceded by bullish or bearish setups. Natural gas’s neutral diffusion index (DI) suggests neither.

Natural Gas (UNG) and Natural Gas Diffusion Index (DI)


The emotions behind frustration manifest themselves in the declining participation of the retail traders. Retail traders, also known as wrong way Charlie, will be short when they should be long.

Natural Gas (UNG) and the Commercial (C) & Nonreportables (NR) Traders COT Futures and Options Stochastic Weighted Average of Net Long As A % of Open Interest



The message within the leveraged market is that connected money continues to increase and decrease long and short position, respectively. This is the market’s way of repositioning the participation of the trade before the next move. In other words, the changing composition with the trend helps to define difference between the weak and short hands.

Natural Gas (UNG) and the Commercial Traders COT Futures and Options ZScore Weighted Average of Long & Short As A % of Open Interest

The setups will come. Technical analysis (TA) then becomes actionable trigger.

RY,

Eric

Headline: US GAS: Futures End Higher As Traders Weigh Weather Outlook

NEW YORK (Dow Jones)--Natural-gas futures ended slightly higher Friday as market participants were reluctant to bet that prices would fall with forecasts pointing toward colder-than-normal weather at the end of the month.

Natural gas for March delivery settled 0.8 cent, or 0.2% higher, at $3.876 a million British thermal units on the New York Mercantile Exchange. On the week, the benchmark contract shed 3.4 cents, or 0.9%.

"There's a little bit of uncertainty," said Cameron Horwitz, a Houston-based analyst with Canaccord Genuity. "People don't want to take it too low in case there's another bout of arctic air."

Source: online.wsj.com