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September Pullback or Hurricane Rally? 8/25/2020NG at the daily view. Natural gas is stuck between two trend lines. They're acting as both support and resistance. Currently, Natty is above all major moving averages which is bullish on its face. That said, this could go in two directions. 1) September usually has a pullback due to cooler weather and less need for A/C. However, the temperatures are just high enough to not need heat or stay indoors. Judging by how many supports are below, I am not expecting a big pullback. The next support could be 2.25, 2.08, or 1.99... And they're all rising. They keyword is "usually." 2) That said, Hurricane Laura is also disrupting the gas and oil extraction and production sites. If Hurricane Laura causes more damage and cut off production, then the supply of oil and gas may decrease further. That would increase the price. A series of gas companies filed for bankruptcies back in June. That also decreases the supply. In either case, Natty will definitely ramp up when we near October due to increased demand. In this cycle, this would be a terrible time to be a bear.
NYMEX:NG1!
by Itsallsotiresome
Disappointing September Pullback? 8/23/2020NG at the daily. NG usually has a pullback in September due to cooler weather, but not quite freezing. There are several supports below. 2.24 and 2.08 will be kind of hard to break since they are the 400 and 300 DMAs. The lowest price that I see this going is 1.97. It's less likely, but Natty has a tendency to do the improbable. September's pullback may prove to be disappointing. A wave of gas companies filed for bankruptcy back in June which caused the short-term bearish pattern during the summer. Utility companies were expecting a prolonged shut down. Here's the kicker. It's about about supply and demand. Gasoline only comprises about 1% of natural gas' usage. The biggest usage has been heat, A/C, and the industrial sector. NY and CA are not industrial states. The Rust Belt and the Midwest are where most of the US' industrial sector is located. Most of the those regions are not shut down. After a series of gas companies filed for bankruptcies and cut production, that means supply decreases dramatically. Even though the US is not back to 100%, the drop in demand is not as big as the drop in suppliers. Think about it. The need for heat and A/C will not go away completely. Eventually, that demand increases over time. If there are fewer suppliers, what happens to price? Furthermore, what are the chances that utility companies have to rethink their projected demands now that more states are opening? September might be a disappointing pullback due to the fact that demand may increase, but the number of suppliers may not. The recent hurricanes did not help with increasing the supply as well. NG mainly has two paths. Either it pulls back to one of the supports and the launches or it breaks the 2.49 resistance. Either way, the end game is that NG may go higher than what bears want. Remember, every bull and bear market cycle ends eventually. It was just time for NG's bear market to end.
NYMEX:NG1!
by Itsallsotiresome
ALL COMMODITIES RALLY|INFLATION OR RECOVERY? As it is obvious from the charts and the title above , the prices of the unrelated commodities, that were presented in the selection above went up significantly from the lows of 2020. It is possible that, with the exception of lumber, that is beating the all time highs for some reason, most of the current price increases are just the recovery to the pre-covid levels. One might argue that this simply reflects the fact that they were all oversold and that this behavior is just front-running the recovery.Keeping that in mind, let's explore if this could be a beginning of the inflation spiral. The exploration: There is essentially three types of the economic shocks: 1-Demand shock.Deflationary pressure. It happens when the economy is quite capable of producing the same amount of goods as before the shock, but the money supply has shrunk, and the consumers have less money to purchase the said goods. Less money is chasing same number of goods, and while the supply inevitably responds to the changed conditions and starts shrinking too, this takes time, and meanwhile you have deflation. This was the kind of shock/crisis we had the last two times. That is why the FED's QE did not create inflation, or rather is was locked up in the financial instruments, as it was filling up the hole in the money supply, created by the bust of the markets, a chain of defaults and deleveraging of the system. 2-Supply shock. Inflationary pressure. It happens when the consumers still have the money to buy the goods, the money supply is still there, but the production is not, so the classic inflationary scenario kicks in, where more money chases less goods. Prices rise. 3- Simultaneous demand and supply shock. That is a mixture of the two of the above. In that case, the two somewhat cancel each other out, as the money supply drops together with the production of goods. However, in reality, one happens faster than the other, which determines the kind of pressure it will have on prices. Now, it was and is a massive challenge for us to figure out if the covid-19 lockdowns were a demand or a supply shock, or rather, which shock would be stronger, as It is obvious for everyone, that businesses closing up limited both the supply and demand for goods, so this is clearly the simultaneous supply and demand shock. And while the balance was not perfect, the two shocks were supposed to cancel each other out, yet the FED and the Federal Government stepped in and the first one provided the "unlimited liquidity", propping up junk bonds, stocks and other heavily levered assets, while the latter rolled out an unprecedented cash handouts to tens of millions of people to fill in the gaps of lost incomes. These two actions clearly tipped the scales to the inflationary pressure side(supply shock) as millions of people were buying goods with the money they did not work for(i.e. did not contribute anything to the supply side). Now, coming back to the commodities prices. As I said, one might argue that this is front-running the recovery, however, that can be countered by the fact that the recovery from any significant crisis takes at least 1,5 years and it took 3-4 years the last time to get back to where we were before, so getting prices of anything to the 2020 beginning levels, where the economy was growing fast and grew for 12 consecutive years before that is wildly optimistic at best. The economy has not recovered, and the recovery will take 1-1,5 years minimum. Thus, I am making the case for that these upshots in prices are the early warning signs of the real inflation and that the further increase in money supply will accelerate this process. Besides, it is clear from the charts that many commodities stand or are reaching strong levels, while having massive bullish momentums, so should the levels be broken upwards, there is literally no ceiling for how high the prices might go. And mind you- it is not a price increase of one or two commodities. The selection above is a representation of the cross-sector simultaneous price increases for the raw materials. I hand picked those with 50% or more increases, but the surges up are visible everywhere across the commodities, so even a 5-7% broad annualized inflation is something unseen by the western world in decades. So yes, this IS inflation. My congratulations to the FED: after 13 years of struggles, they finally got what they wanted- the real inflation, yet I am not sure that the people are as happy for that as the FED bosses are. Guys, thank you for reading, I appreciate your take on the issue, so feel free to comment below. Also, don't forget to like and subscribe! Have a nice day!
MCX:NATURALGAS1!Long
by ProSignalsFx
1
NG at a Crossroads 8/18/2020NG at the daily view. NG finally played out its measured move from the inverse head and shoulders pattern during the summer and the bull flag from a few trading days ago. The original measured move was 2.48. NG made it to 2.465. Close enough. It's too bad that that I exited my long positions out of risk management. It's Natty after all. Right now, the NG is between two trend lines. Furthermore, NG is above major moving averages including the 200, 300, and 400 DMAs. Currently, the 50 MA is about to cross the 200 MA. All these signs are bullish. What's the bear case? September is coming. Usually, there is a pullback in early September due to cooler weather. Courses of action? If NG pulls back during September, that would be a good time to start scaling in longs for the fall/winter ramp up. If that pullback happens, then 1.98 may be the lowest projected price. However, 2.24 and 2.08 are also supports to consider. Personally, I'm doing a bigger buy order at 1.98 The key resistance right now is about 2.49. If the NG breaks above 2.49 or that upper blue line, then there's not much stopping it go head to 2.70ish.
NYMEX:NG1!
by Itsallsotiresome
Time is Running Out for NG Bears 8/14/2020Natural gas at the daily view. Natty is currently in a giant bull flag right now. Bears had nearly 2 weeks and every chance to take NG down. However, it didn't happen, yet. Unless that happens, Natty is consolidating for another leg up. The 300 DMA is at 2.08. The 400 DMA is at 2.24. That's why Natty has been bouncing between those two prices. Here is why bears are running out of time. The 20 DMA just crossed upwards to the 200 DMA. Normally, that's a bullish sign. The 50 DMA will be doing the same within less than 2 weeks. When that happens, the measured move for the next leg up is around 2.48. My bias at this point is becoming increasingly bullish. Personally, I'll start scaling in next week.
NYMEX:NG1!
by Itsallsotiresome
1
Natural Gas Seasonal Wait 8/12/2020This is natural gas at the daily view. When it comes to natural gas, you have to think big picture first. Natural gas moves much slower and in bursts. During the summer, every trader and the mother was bearish on natural gas. What they didn't see was the inverse head and shoulders forming (marked with yellow curved lines). Natural gas' sentiment is still very, very bearish. The bearish traders are looking at NG's micro movements and for any signs of bearishness. That's more of a sign of desperation. In market psychology, whenever something is excessively bearish or bullish, then the opposite usually happens. Why? Because the traders tend to take a bias in positions that they are ALREADY in and tend to double down in their bias. Natural gas is currently in a bull flag right now. There is a minor support at $2.05 where the bottom of the flag will intersect around August 14th. The bigger support would be (price in time) around 1.975 by August 24th. That's when the bottom of the bull flag meets the channel line (bigger support). In the case of NG, time is more important than price. NG is very seasonal. It's experiencing its summer spike, but then consolidates or drags down in September in preparation for the fall/winter ramp up. Here is the bottom line with NG. Bears have less than two weeks to take this down below 1.90 and cancel out the bull flag. The longer that it stays consolidated in that bull flag, the more buyers that NG will gather for the next leg up and just in time for the rest of the summer spike. Right now, it's at a vulnerable position until it reaches a support to bounce off from. If bears fail to take this down below $1.90, then the measured move for the next leg up may be around $2.48. I'd rather wait to see how it reacts to the supports below myself before committing.
NYMEX:NG1!
by Itsallsotiresome