With all of the hot air floating around Washington, D.C., we saw natural gas drop from $3.800 MMBtu in mid-September to test the waters below $3.500 for one day, Sept. 26. Last week November natural gas (NYMEX:NGX13) opened at $3.755 and closed the week at $3.589.
Also note moving a bit into the future demand for gas will increase as the U.S. becomes a major player in exporting liquid natural gas (LNG). Who ever thought the US would become a major exporter of energy? Sounds a bit weird doesn’t it? Look at the daily chart to see a new buy trigger.
Looking at big money we see this past week Producers added to net shorts at -73,811 contracts, Other Reportables (the largest net short holder) dropped net shorts to -130,319 contracts, Swap Dealers had a very slight drop of net longs now at 182,743 contracts, and Managed Money dipped back into net shot territory at -3,154 contracts. You can see on the weekly chart exactly what you need to watch for with big money — an increase to net longs by Managed Money and an increase in net shorts by Producers and Other Reportables. When this starts taking place, the ride up will be stronger and will take natural gas to its highs for the year.
If you need help understanding how to understand how to use the NEW COT report to your benefit get instant access to my new e-book "What Lies Beneath ALL Trends". It is filled with eye opening information.Commercial Net Tracker instructions: This form tracks the Commitment of Traders (COT) data for the commodity futures market. This form "looks" at the most recent five weeks of COT data and provides visual indications of the data. A) If the current value is at a 12-month low, the cell will display a red/burgundy background. B) If the current value is at a 12-month high, the cell will display a green background. C) If the current value went from net negative to net positive, the cell will display a blue background (indicating a bullish condition). D) If the current value is both a 12-month high and also went from a net negative to a net positive, the background will be green. You should view the data with green backgrounds to determine if they also went from net negative to net positive.
Proceed to Page 3 for this week's detailed fundementals...
On the daily chart ADX has dropped to 29 as DI- is also dropping reflecting a weakening trend. MACD is dropping divergence from below the signal line and Stochastics are correcting from oversold territory. With the unseasonably warm weather in the Midwest we have yet to see cold weather increasing demand, but that will be coming, that I can guarantee.
On the weekly chart ADX at 19.6 reflects a weak trend and Stochastics have corrected from oversold territory and are now in the high end of mid-range.
Have a prosperous trading week.
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