The prompt contract in the Natural Gas futures market (NYM.NG) dropped a 'very big'* 8.6% on Tuesday to sink to a new contract low of $7.261 per MMBtu, which was also the close of the day. This comes after the Labor Day holiday. Will NG continue to sink to record lows?
* One-day percentage loss is more than two standard deviations stronger than the average one-day percentage change measured over the last 30 trading days.
Q: How has NYM.NG performed in the past when it records a 'very big' decline after a holiday?
A: According to the nine previous occurrences of this event, EventEdge indicates that NYM.NG has shown a somewhat bearish edge that peaks 11 trading days after the event. Thus, the projected date for the peak of the bearish edge relative to the current event date (Tuesday, Sept. 2, 2008) is Wednesday, Sept. 17, 2008.
NYM.NG declines in 89% of the cases (8 of 9) by an average of 10.7% relative to the close on the event date. The average of the one rally is 4.9%. The overall return of the 9 cases is -9.0%, which, based on the close of NYM.NG on the event date ($7.261), provides a target price of $6.608.
The second graph depicts how NG performs after dropping down 'very big' to trade at a contract low (omitting repeat occurrences within 10 trading days).
According to the 10 previous occurrences of this event, EventEdge indicates that NYM.NG has shown a very strong bearish edge that peaks eight trading days after the event. Thus, the projected date for the peak of the bearish edge relative to the current event date (Tuesday, Sept. 2, 2008) is Friday, Sept. 12, 2008.
NYM.NG declines in 100% of the cases (10 of 10) by an average of 3.7% relative to the close on the event date. Which, based on the close of NYM.NG on the event date ($7.261), provides a target price of $6.992.
To view these idea in our EventEdge® analysis tool click either 1st Graph or 2nd Graph.
Ronish Patel is an analyst with MarketHistory.com.
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Natural Gas' All-time Low a Temporary Record? - September 3, 2008
