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Daily Natural Gas Update - 06.02.13

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Posted on Wed, 06 February 2013 17:57 | 0

Natural gas prices have started to ramp up on what I think should be the beginning of the next up leg. In March futures as seen in the chart above prices have moved nearly 20 cents after setting an interim bottom 1 week ago. As of this post prices are flirting with the 50 day MA; identified by the green line and within a few pennies of the 38.2% Fibonacci level. 

I have advised clients to scale into bullish trade looking out to May and June contracts. Those wanting a bit of a cushion could opt to sell out of the money call options 1:1. On a move higher you should make more in your futures leg than you lose on your options leg. As for upside targets on the trade use the Fibonacci levels to structure an objective.

I recognize inventories are extremely high and we may continue to see injections but the reality is the market knows this as well and my take is much of this is priced in. On further cold weather, declines on supply or even smaller injections than previously factored in we should get moderate appreciation. No I’m not calling for a return to $5-7 but certainly I think we have the potential to see a $4 trade in my opinion.

Daily Natural Gas Chart 2
Click on graph to enlarge.

By. Matthew Bradbard

To discuss in more detail this chart or any other you can reach me at: mbradbard@rcmam.com or 954-929-9997

Risk Disclaimer: The opinions contained herein are for general information only and are not intended to provide specific investment advice or recommendations and are not tailored to any specific’s investor’s needs or investment goals.  You should fully understand the risks associated with trading futures, options and retail off-exchange foreign currency transactions (“Forex”) before making any trades. Trading futures, options, and Forex involves substantial risk of loss and is not suitable for all investors. You should carefully consider whether trading is suitable for you in light of your circumstances, knowledge, and financial resources. You may lose all or more of your initial investment. Opinions, market data, and recommendations are subject to change without notice.  Past performance is not necessarily indicative of future results.


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