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Does Natural Gas Ever Intend to Bounce?


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
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.

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.

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.

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
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.
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No positions in stocks mentioned.
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