You have to trade cyclicality, and that’s what you’ve been doing for a couple of months now, buying the dips and riding them higher. However, there almost always comes a day, and I don’t know if today is that day but it could be, that thing shifts suddenly. One thing’s for sure, this is a really ugly looking chart, and therefore I don’t really want to be the first person to try to catch a falling knife. I’ll be watching this, but I suspect that if we bounce towards the $3.50 level, we’ll see selling pressure again. And once that’s confirmed, I’ll switch over to shorting for a week or two and then leave it alone.
Natural gas is notoriously slippery to trade and unfortunately for most of the people that I talked to, they live in places like the Middle East, and they don’t understand that this is a US contract that you are looking at here and most CFDs are based on the Henry hub contract, which is a storage facility in Henry, Louisiana. So, the more you know, the more you realize you have to be somewhat specialized in this market. Right now, it looks like winter’s almost over, at least as far as traders are concerned.
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