That's it. Thanks Ron
Symbol is H.
H- Henry LD1 Fixed Price Swap Future
Shows ICE OI increased 88,894 lots for report date Dec 12th, which I assume is todays report for trading on 12th since the settlement prices agree.
Note ICE contract is 2500 MMBtu vs NG 10000 MMbtu so 88,894 ice lots = 22,223 NG Lots.
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I called for continuation of bullish move last week and I think the spike phase is ending/about to end now which usually is followed by channel up or down...My take is that it still can go for 50-60 cents (and 3-4 weeks) before turning down for good unless weather warms up greatly causing the channel to go down...More probabilities of it going higher...
One very interesting observation is super high volatility of March contact - March 6 calls are about same price April 5 calls even though March futures are only about 20 cents more. Done any have any thoughts regarding it? What causing it ? How to use it (other than writing naked....)
It is the volatility going through roof that is making holding very hard....
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From a technical standpoint nothing "has" to happen before Christmas. That being said sustained trends don't just go straight up with no pullbacks which is exactly what NG is currently doing. I don't see anything right now that suggests that the current NG move is a "sustainable trend". It is highly probably that the next "correction" will be a strong reversal.
My statement about xmas was based on the following:
From a seasonal standpoint all of the past 23 years have experienced a precipitous decline in NG during the last week of December and/or first week of January.
Having spent a lot of time in the equities world where manipulation is the name of the game (and very little in NG), I find this discussion very interesting. I would love to think that NG price is microscopically linked to supply. However, is this market manipulateable? Can price overshoot by $1? $2 Looking at a chart back to 2009, this thing can get to 5/5.5 easily. Can suppliers hold back supply to cause price shocks? For you experienced NG traders, is supply well known enough and supply linked to price enough for traders to call prices within $1? thanks
Are NG futures manipulatable? Oh yeah. Just google Amaranth 2006.
Suppliers (owners of NG in current storage) hold back supplies? Doubtful. Or else the inventory report this week wouldn't have been below predictions for the amount of withdrawal.
Now the owners of wells (suppliers of storage) could shut them down to increase price. But even in 2012 when prices were very low, NG production increased.
The US EIA gives out weekly inventory numbers so that supply is well known.
A lot of users of NG are locked into using it and using more of it when it gets colder. The wild card is electric generating plants that can switch from NG to coal and back. If NG gets too expensive they will switch to coal. If NG gets cheap they will switch to NG.
I am a tech trader (as you may already know from my previous noob fundamental comments) and may agree with you that fundamentals overrule technicals here. However if that is not the case, here are my two cents:
First the move to the bullish territory on 11/29 had almost no resistance, therefore such strong action. We are greatly overbought right now on the daily (50 days CCI over 210 and heading down with current price action, nice divergence on the 14 days CCI). This does not mean the market cannot stay overbought for an extended period of time, however I would expect short-term pullback to the 4.100-ish levels.
Unfortunately the weekly charts show a different picture. 14 period CCI is overbought, just touching 200, but the 50 period CCI just crossed 0 couple of days ago. We have just switched from bearish to bullish territory on the weekly, so that there is A LOT of upside action possible. There is a strong resistance at the 4.690 levels, which may cap any further movement. To do this we have to break 4.490 levels first and stay above (May 2011 - April 2013 trendline). In case it will not hold the 4.490 levels, measured move will bring us just notch over 5.000 price levels.
Summary: if we break and stay above 4.490, there is nothing to stop NG to go to 4.690 level. In case this will not hold either - say hello to "polar weather" and 5.000 mark!
In case either of these levels (4.490 or 4.690) hold, we should be back at 3.825 or lower. This might be supported by seasonals as well. As there was almost no resistance on the move up, there would be a little support on the move down, therefore the move might actually be quite hysterical.
BTW, NG nicely respects cycles, which support pullback theory starting about week from now. Last but not least, measured cyclical move should not break 4.490-ish level (note that it is the same as above mentioned trendline breakout), which seems to be the key price level for next days.
Last edited by rani; December 13th, 2013 at 01:53 PM.
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