Natural Gas - Before Ouching Territory, Let's Rally to $3.8One thing appears to be rather obvious: crude's rally has fizzled out:
Oil - Bulls Will Be Totally Annihilated
And that's bad news for bulls. If crude's rally has fizzled, can natural gas counter rally?
Well, natty hasn't done much all year. One of the reasons is probably that the world, which is controlled by the Communist Party, wants to SaVe ThE WoRlD FrOm CliMatE cHaNge by destroying the plastic industry, which natural gas supplied.
Next, they want to get rid of furnaces, which natural gas supplies, and have everyone live on heat pumps (an air conditioner with a blow side that can get hot instead of just cold), which rely on electricity and not natural gas.
At least electricity generation itself still mostly relies on natural gas, and that's never going to be replaced by solar and wind because the technology doesn't meet the requirements of modern consumption.
At the end of July, I called that Natty would not go up until it goes down more, because it seemed to me at the time that the charts just don't have institutional support to go uppy past $10 this year.
NatGas - No Moon Until Doom
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Right now, if you want to go long on anything, because it doesn't matter if it's DoCToR CoPpEr or equities or gold, you have to be either low risk or hedged, because of the imminent threat of the collapse of the Chinese Communist Party.
Xi Jinping has the game theory problem of being the head of the most wicked and heinous regime in all of human history, the Party that dared to commit organ harvesting and genocide against Falun Dafa's 100 million practitioners.
Although that persecution was launched by former, and now-dead Chairman Jiang Zemin, and although Xi has been killing the Jianglings for years in his Anti-corruption Campaign, the problem is Xi is still the head of the Party, and you always kill a dragon by severing its head.
And its tail was already severed recently when former Premier Li Keqiang was killed by "an heart attack" at the ripe age of 68, which is very young for a Party prince to die.
If Xi dumps the CCP Gorbachev-USSR style in the middle of the night, especially if it happens on a Friday or a Saturday, everything is going to be gap down gap down gap down gap down and never come back because of the time difference between Beijing and Manhattan.
And if Xi really is too stupid to do that much, there's still a raging pandemic besieging Zhongnanhai, and the Emperor's bedroom has never been immune to plague.
So over the last few months, what's happened with natural gas is, it's up apparently a lot. Like, from $2.7 to $3.6 sort of a lot and looked almost rampy on the monthly bars until it corrected this November:
The weekly, though, shows the pain that the rallies keep getting sold off:
And this is because the rallies weren't really rallies. What would happen is one month would settle and the next month's contract, which is trading in contango, would roll in and give the appearance of uppy and smash up levered futures traders.
But the ETFs show that natty has done absolutely nothing all year.
UNG, which is an unlevered fund:
Is down 56% this year, hasn't rallied one bit, and looks poised to break necks around $4, because what doesn't go up is going to go down. It's been flat for too long.
2x leverage BOIL (long) had a 20:1 reverse split 6 months ago, never rallied, and looks pretty puketacular right now:
And 2x leverage KOLD (short):
Has spent 6 months in a 35% range killing options buyers in what looks like a "bear flag" that's just taken way too long to do the thing bear flags are supposed to do.
And so we can only surmise that the once-fabled $1.8 to $1.6 range on Natty is incoming.
Perhaps we'll see this magic before the end of the year.
If you want to short natty, I have some reservations that this $3.6 monthly high is going to remain the monthly high, because it was set on the first day of the month.
And so there is a potential trade opportunity, roughly now, to take out like $3.8 and net a 25% bagger.
Or just wait until $3.7 and go short on a size that you aren't going to get liquidated on until $5 and be willing to put up with $4 for a day or two.
But most importantly, natty couldn't possibly have topped at $10, and simultaneously couldn't possibly have bottomed at $1.9 with the way 2023 is playing out.
The most sadistic MMs on any asset are the Natty overlords and they're about to get started, I believe.
