Natural Gas Futures (NYM.NG) gapped open higher during Monday's session, where the opening price was higher than the previous day's high. Nevertheless, natural gas dropped down a 'big'* 2% during the session to close the day at $11.301 per mmBtu. What does history have to tell us about this price action?
* One-day percentage loss is more than one standard deviation stronger than the average one-day percentage change measured over the last 30 trading days.
Q: How has NYM.NG performed in the past, during the second quarter, when it gaps open higher but records a 'big' decline for the day?
A: According to the nine previous occurrences of this event, EventEdge indicates that NYM.NG has shown a strong bullish edge that peaks seven trading days after the event. Thus, the projected date for the peak of the bullish edge relative to the current event date (Monday, May 12, 2008) is Wednesday, May 21, 2008.
NYM.NG rallies in 78% of the cases (7 of 9) by an average of 7.7% relative to the close on the event date. The average of the two declines is 0.9%. The overall return of the 9 cases is 5.8%, which, based on the close of NYM.NG on the event date ($11.301), provides a target price of $11.956.
To view this idea in our EventEdge® analysis tool click here.
Ronish Patel is an analyst with MarketHistory.com.
