Saturday, November 27, 2010
Wednesday, November 24, 2010
Since the bullish gap breakout September of last year, natural gas rallied off its lows of $2.409 targeting and completing a 50% retracement from the selloff of $9.60 to make a high of $6.108 January of 2010. As this high was made, natural gas slowly moved lower and formed a channel that it’s been within for the year of 2010. In October natural gas made a low of $3.255 before finding support and pushing higher. This low came within testing the lows of May of 2009 at $3.155. By holding and pushing higher the market has put in a low that is trying to create a potential inverted head and shoulders formation. The past three weeks has been a consolidation of that push higher and this has created a bull flag as the December contract goes into expiration on November 24. Market bulls will want to see a continuation of that push off the lows with short covering going into expiration to try and test and break out of the downward channel or as January becomes front month the difference in price puts it above the channel to gap and go higher. Upside resistance to be met up to the June highs of $5.196 and then January highs of $6.108. Getting above and holding $6.108 gives the bulls an inverted h/s target of $9.807 (6.108-2.409=3.699, 3.699+6.108=9.807). This also retraces 100% of the move from $9.600 August 2008 to $2.409 September 2009.
As of Friday, November 19, 2010:
December 2012 $10C Open Interest = 2,713
December 2013 $10C Open Interest = 2,790
RISK DISCLOSURE: PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS. THE RISK OF LOSS IN TRADING FUTURES AND OPTIONS IS SUBSTANTIAL AND SUCH INVESTING IS NOT SUITABLE FOR ALL INVESTORS. AN INVESTOR COULD LOSE MORE THAN THE INITIAL INVESTMENT.
Saturday, November 20, 2010
Tuesday, November 16, 2010
Netflix (NTFX) six month daily:
Russell 2000 (IWM) six month daily:
US Oil ETF (USO) six month daily:
Euro ETF (FXE) six month daily:
I think there's more downside to come and failed breakouts often lead to sharp corrections. A week ago everyone on the planet was wild eyed bullish, investors may be re-thinking fed induced purchases.
Disclosure: I do not have any positions in the above equities but I am short some stocks and am long the US dollar against the Aussie dollar.