Does Natural Gas Ever Intend to Bounce?

By Rod David  JAN 02, 2013 3:50 PM

Wednesday's gap down to new lows suggests the true intent in natural gas is to bring all potential sellers out of the woodwork.

 


The following are the latest daily summaries of my ongoing intraday coverage, providing context to interpret price action. Any prices listed are for a contract's current "front month." Their direction tends to correlate with any ETFs listed for each.

Today’s Highlight: Now that this fiscal cliff business has been settled once and for all (right?), and year-end mark-to-market influences are moot, markets can get on with their true intent (right?). I wonder whether the true intent in natural gas is to bring all potential sellers out of the woodwork. Wednesday’s gap down to new lows suggests as much.

Dollar Basket
Mar Contract DX; (NYSEARCA:UUP), (NYSEARCA:UDN)
Despite initially weakening in reaction to the fiscal cliff vote, 79.50 support held again to produce another fresh high, with 80.20 still in-play.

Eurodollar
Mar Contract EC; (NYSEARCA:FXE)
The gap up in reaction to the fiscal cliff vote was reversed into negative territory testing 1.3165. So long as 1.3195 is not recovered, 1.3080 is now in-play.

Gold
Feb Contract GC; (NYSEARCA:GLD)
Monday’s rally extended to higher highs with Wednesday’s gap up and test of 1695.50. Near-term momentum cannot delay recovering 1693.00 to resume the rally and avoid a pullback to 1675.00.

Silver
Mar Contract SI; (NYSEARCA:SLV)
Monday’s hesitation did prove to be bullish from a contrarian perspective by gapping up Wednesday. New hesitation upon testing 31.50 might also be bullish, but its reaction down to test 31.00 support must recover back above 31.40 without further delay Thursday to test the 31.65 target on this leg.

30-Year Treasury
Mar Contract US; (NYSEARCA:TLT)
Monday’s drop to 147-00 support gave way easily in reaction to the fiscal cliff vote, cratering Wednesday to 145-13. Having round-tripped all of the prior two-week 3-point rally, a second consecutive lower close would confirm that this leg is next targeting 143-30.

Crude Oil
Feb Contract CL; (NYSEARCA:USO)
Wednesday’s fresh high up to 93.87 retained enough gain intraday to confirm Monday’s breakout close above above 92.00. The next higher target is 95.15, presumably on the way to 99.00.

Natural Gas
Jan Contract NG; (NYSEARCA:UNG), (NYSEARCA:UNL)
Despite buyers not gaining traction for any recent gaps down, ­ as was evidenced by testing prior highs Monday, ­ Wednesday’s open gapped down sharply to fresh lows. While the pattern may become an Island by gapping up Thursday, there is still nothing compelling about positioning long this market before a signal is triggered.

Editor's note: Rod's analytical techniques are designed to efficiently identify targets and turning points for any liquid stock or market in any time frame. He applies his techniques live intraday, primarily to S&P futures, at RodDavid .com.
No positions in stocks mentioned.

The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

Copyright 2011 Minyanville Media, Inc. All Rights Reserved.