Natural Gas
As followers here well know... I follow nat gas... and occasionally trade it with leverage as the BOIL/KOLD pair. And, once again, its getting to be time to pay closer attention to that trade...
Currently, BOIL is bumping bottom at under $8.75... but hit a low of $8.13 on August 5th. The chart screamed buy in mid July... but I demurred... and continue to wait for it. The chart today... is definitely "lower"... but, it shows a couple of reasons to continue waiting for it. The NVI, for one. is rolling over, showing smart money sneaking out of the trade. The RRG components are both "just" below 100... the relative strength at 99.22, the momentum at 96.39, both rounding into a low... which is quite likely to roll over and move a bit lower... even if only briefly. PMO (-7.86) is gently rolling over into lower, and COPP (-23.72) is down already and continuing lower, while money flow is in a sharp periodic decline, for now.
Still, I'm not negative on the trade... but, the chart says "wait for it" and I shall. Nat gas tends to be a steady outperformer throughout the breadth of major market declines... but that, as is true of other commodities, doesn't mean you should expect it will soar on a really bad day in the market ? Drift continues, for now...
That risk in "really bad days" in the market is probably coming, soon, too... around about mid-September to md-October... with the Fed set to cut rates... and the market, in spite of the touts usual propaganda, seems at least somewhat passingly aware "that's not good for stocks".
But, when might we expect the market to crash ? [And with interest in more than just putting on a trade in BOIL ?] Thus far, the Fed has kicked the can as long as they could... pretending to believe government employment numbers. Now, its up to Treasury to carry Kamala's water for her, dragging her along in spite of herself... and they are trying... with the magical PPT $ flows now providing the mysterious liquidity as sufficient to deliver "no visible means" along with the support.
That will end "soon"... some say "scheduled" for a sea change on Sept 15th... as a bureaucratic function... but perhaps more as a bureaucratic "handoff" to enable pinning it on the Fed ? But, even rate cuts [fully expected with the next Fed meeting, Sept 17-18] being driven by the economy imploding doesn't always result in immediate market declines... given some too obstinately resist gaining awareness in the reason(s) for the move. Today, more than ever, the market's upward bias is both thoughtless... hardwired... and consistently front run by the machines.
But, over-balancing all of that... history suggests (which, in current context should be "screams") that "things tend to work out" to have markets "not interfere" with incumbent's re-election chances. But, also... history says... by the end of September... it doesn't matter any more. Voters tend not to weigh short term market events at all heavily in considering how they will vote. By late September... opinions are largely set... and there's likely a slight bias in favor of incumbents fostered by enabling a bit of additional anxiety... some deluded few thinking there's greater safety in the status quo versus "risky" change. And, without doubt, that's going to be true for most suite-dwellers on Wall Street... slaved to "the system"... in which they trust.
So, markets down... and the commodities likely down with them on "crash" days... and THEN nat gas should drift higher as the focus turns to awareness that "its fall... and it gets cold in winter"... and gas is useful as it keeps people warm.
So, keeping an eye on the things... expect natty to continue to bump along... above its March lows... for another week or two... but, perhaps... not continuing the drift past mid October ?
BOIL in red versus natty...
|
