Natural Gas / NG - It's Officially a Bear. Now, Hold My Beer
تم تحديثه
This post is a continuation of a previous post, which is based on a longer-term analysis:
Natural Gas / NG - What, Truly, Is a Bull?
With Wednesday-Friday and Monday morning's long-awaited dump into the fabled double bottom around $7.4, natural gas can only be considered to have formally shifted into a bearish market structure, based on both the 4H and Daily candles.
Note that the dump also breached range equilibrium.
What this means, is that it's finally time to look for a 45-day short play on natural gas. Remember, Freeport is supposed to re-open for export to Europe in mid-November, so in principle you'd want to see the downside manipulation occur before then.
However, all this time, big firms have been shipping U.S. natural gas via boat to Europe, and making more than $100 million a shipment in the process. Demand has been so enormous that there aren't enough ships on the planet available to meet it.
So it's not that U.S. Henry Hub pricing hasn't reflected the demand problem caused by Europe shooting itself in the knees trying to spite Putin and Russia so it can fit in with cool kids in the Globalist Bloc. It has.
It's just that the reality is, no matter the news and how it's framed, an energy crisis is coming to North America too.
You just won't see it until inflation starts to dip. Energy prices have to come down for inflation to dip. Once inflation dips, it will rip again, because it hasn't topped yet. Anyone who says inflation has peaked obviously can't read The Diagram, and nobody who is unable to read The Diagram is worthy of being a Doctor.
Regarding price action, once something as turbulent as natural gas dumps, and dumps a lot, and takes out key pivots, you have to be careful. At present the market makers are still employing these patterns where they seek and destroy to the downside and then quickly seek and destroy the upside.
It's very hard to catch a truly trending market at the moment, and so you have to employ a surgical strike style of trading and positioning rather than trying to get long or get short and rack up the Sklansky Bucks comfortably.
For example, the stock indexes look like they're going to bounce, and probably hard, before the next big leg down, regardless of what comes out of Wednesday's FOMC:
SPX500 / ES - It's Still a Bull. Now, Good Luck Riding It
With natural gas, what I'm really looking for here to position puts for November is a bounce into the $8.9 range. The problem is, the natural gas market makers are not so polite. They don't want you along for their ride. It's their ride, and if you're good enough to figure it out, you can make money. But if you can't, they will buck you off and you can watch from the sidelines.
They're a lot like angry cowboys, and so there is a possibility that is far from negligible that a number like $9.6 prints again before we see the next move down.
Or at least a number that starts with $9.
Regardless, in my opinion, once this bear is finished growling and knocking over trees, we will actually begin to see trending markets again. They won't trend for all that long, but you won't get bounces this time. It'll just landslide or gap down to where it wants to go and collect all the badly positioned longs or the longs who somehow never took profit during a run to $10.
WTI Oil, likewise, is in the same boat.
WTI Crude / CL - An Intervention: Saving Blind Bulls
Although its price pattern is more notable in that it once again traded back to the $81 gap and bounced again. If it runs the $91 double top it left behind and keeps going up, it might just be a bull run again. But if it just crushes $91 and starts to fall, you can surely expect numbers like $69 and $50 are en route, no matter what the fundamentals say about global demand.
https://www.tradingview.com/x/xJOXD8a7/
What you're ultimately looking at with the positioning of the markets, whether it be copper, soybeans, stocks, is you're looking at first some bouncing and then what is likely a market-wide sell off with some days of panic that is simultaneously subdued and overexaggerated.
All of which is designed to have you sell low and then buy back higher with half your account left intact.
Consider that last week's CPI dump took 200 points from the SPX in a few hours, but only raised the VIX by like 3 points. VIX 28 is now a ceiling. VIX 40-42 will be where you find the bottoms. VIX 72 will come when the markets truly start to head to the downside.
After the global avalanche is finished, you'll likely see the Nasdaq be extremely strong for a few months. SPX will be okay, but will be drug down by energy companies, which won't do particularly well because they'll be drug down by natural gas and WTI accumulating at low prices. Dow will probably be better than SPX but worse than Nasdaq on account of its defense contractors likewise accumulating at low prices.
Once retail is done gorging themselves stupid on $30 SNAP and $45 BBBY and $198 AAPL, reality will unfold. Stocks will crash, hard.
WTI and Natural Gas and other commodities (Except for silver and gold. Seriously. Quit being a moonboy on ancap stuff. It'll rot your teeth.) will make major new highs and energy companies and defense contractors will become the safe haven in the markets.
When those days unfold, you can expect major geopolitical turbulence, which can include as much as the collapse of the Chinese Communist Party. You can also see significant natural and manmade disasters unfold. It won't be a pleasant time. But you should know that what unfolds will appear chaotic but actually be orderly.
Everything unfolding in the world is orderly and well arranged. This world will not be destroyed, although there will be significant hardship for many regions, and few will find the outcome comfortable.
But for now, you can focus on trying to make money. You have the difficult task of trying to find a time to short natural gas inside of a 15% possible range. You can short $8.9, but they really might take that $9.3 pivot. If you wait for the $9.3 pivot, you might not get filled and miss the move.
This kind of move back up is also designed to dump the ETFs, many of which trade on 2x leverage (10% natural gas move = 20% ETF dump), so big pockets can get fat long for the real dump.
It's very annoying. They're really very annoying about how they do things. It's a constant gut check and a series of difficult and suboptimal circumstances, because time is an excellent weapon and they use it very well.
You should know that all the decisions you face when trading and all the loss and gain you come across are actually opportunities to cultivate your mind and your heart. They're chances to improve.
Every thought and feeling you have while doing this is you forging yourself like quicksilver being refined inside of a crucible powered by burning hydrogen.
Everything depends on how you improve your heart and employ your rationality. Fear and greed are your greatest enemies.
Natural Gas / NG - What, Truly, Is a Bull?
With Wednesday-Friday and Monday morning's long-awaited dump into the fabled double bottom around $7.4, natural gas can only be considered to have formally shifted into a bearish market structure, based on both the 4H and Daily candles.
Note that the dump also breached range equilibrium.
What this means, is that it's finally time to look for a 45-day short play on natural gas. Remember, Freeport is supposed to re-open for export to Europe in mid-November, so in principle you'd want to see the downside manipulation occur before then.
However, all this time, big firms have been shipping U.S. natural gas via boat to Europe, and making more than $100 million a shipment in the process. Demand has been so enormous that there aren't enough ships on the planet available to meet it.
So it's not that U.S. Henry Hub pricing hasn't reflected the demand problem caused by Europe shooting itself in the knees trying to spite Putin and Russia so it can fit in with cool kids in the Globalist Bloc. It has.
It's just that the reality is, no matter the news and how it's framed, an energy crisis is coming to North America too.
You just won't see it until inflation starts to dip. Energy prices have to come down for inflation to dip. Once inflation dips, it will rip again, because it hasn't topped yet. Anyone who says inflation has peaked obviously can't read The Diagram, and nobody who is unable to read The Diagram is worthy of being a Doctor.
Regarding price action, once something as turbulent as natural gas dumps, and dumps a lot, and takes out key pivots, you have to be careful. At present the market makers are still employing these patterns where they seek and destroy to the downside and then quickly seek and destroy the upside.
It's very hard to catch a truly trending market at the moment, and so you have to employ a surgical strike style of trading and positioning rather than trying to get long or get short and rack up the Sklansky Bucks comfortably.
For example, the stock indexes look like they're going to bounce, and probably hard, before the next big leg down, regardless of what comes out of Wednesday's FOMC:
SPX500 / ES - It's Still a Bull. Now, Good Luck Riding It
With natural gas, what I'm really looking for here to position puts for November is a bounce into the $8.9 range. The problem is, the natural gas market makers are not so polite. They don't want you along for their ride. It's their ride, and if you're good enough to figure it out, you can make money. But if you can't, they will buck you off and you can watch from the sidelines.
They're a lot like angry cowboys, and so there is a possibility that is far from negligible that a number like $9.6 prints again before we see the next move down.
Or at least a number that starts with $9.
Regardless, in my opinion, once this bear is finished growling and knocking over trees, we will actually begin to see trending markets again. They won't trend for all that long, but you won't get bounces this time. It'll just landslide or gap down to where it wants to go and collect all the badly positioned longs or the longs who somehow never took profit during a run to $10.
WTI Oil, likewise, is in the same boat.
WTI Crude / CL - An Intervention: Saving Blind Bulls
Although its price pattern is more notable in that it once again traded back to the $81 gap and bounced again. If it runs the $91 double top it left behind and keeps going up, it might just be a bull run again. But if it just crushes $91 and starts to fall, you can surely expect numbers like $69 and $50 are en route, no matter what the fundamentals say about global demand.
https://www.tradingview.com/x/xJOXD8a7/
What you're ultimately looking at with the positioning of the markets, whether it be copper, soybeans, stocks, is you're looking at first some bouncing and then what is likely a market-wide sell off with some days of panic that is simultaneously subdued and overexaggerated.
All of which is designed to have you sell low and then buy back higher with half your account left intact.
Consider that last week's CPI dump took 200 points from the SPX in a few hours, but only raised the VIX by like 3 points. VIX 28 is now a ceiling. VIX 40-42 will be where you find the bottoms. VIX 72 will come when the markets truly start to head to the downside.
After the global avalanche is finished, you'll likely see the Nasdaq be extremely strong for a few months. SPX will be okay, but will be drug down by energy companies, which won't do particularly well because they'll be drug down by natural gas and WTI accumulating at low prices. Dow will probably be better than SPX but worse than Nasdaq on account of its defense contractors likewise accumulating at low prices.
Once retail is done gorging themselves stupid on $30 SNAP and $45 BBBY and $198 AAPL, reality will unfold. Stocks will crash, hard.
WTI and Natural Gas and other commodities (Except for silver and gold. Seriously. Quit being a moonboy on ancap stuff. It'll rot your teeth.) will make major new highs and energy companies and defense contractors will become the safe haven in the markets.
When those days unfold, you can expect major geopolitical turbulence, which can include as much as the collapse of the Chinese Communist Party. You can also see significant natural and manmade disasters unfold. It won't be a pleasant time. But you should know that what unfolds will appear chaotic but actually be orderly.
Everything unfolding in the world is orderly and well arranged. This world will not be destroyed, although there will be significant hardship for many regions, and few will find the outcome comfortable.
But for now, you can focus on trying to make money. You have the difficult task of trying to find a time to short natural gas inside of a 15% possible range. You can short $8.9, but they really might take that $9.3 pivot. If you wait for the $9.3 pivot, you might not get filled and miss the move.
This kind of move back up is also designed to dump the ETFs, many of which trade on 2x leverage (10% natural gas move = 20% ETF dump), so big pockets can get fat long for the real dump.
It's very annoying. They're really very annoying about how they do things. It's a constant gut check and a series of difficult and suboptimal circumstances, because time is an excellent weapon and they use it very well.
You should know that all the decisions you face when trading and all the loss and gain you come across are actually opportunities to cultivate your mind and your heart. They're chances to improve.
Every thought and feeling you have while doing this is you forging yourself like quicksilver being refined inside of a crucible powered by burning hydrogen.
Everything depends on how you improve your heart and employ your rationality. Fear and greed are your greatest enemies.
ملاحظة
A key point to emphasize here, though, is that it doesn't have to bounce. Things, have indeed changed and consolidation can just turn into more landslide. Although there are unaddressed inefficiencies, sometimes price action is driven away from those areas and it takes a very long time for it to return.
Silver is a good example of that, from Aug. 15, more than a month ago now.
ملاحظة
And thus, like, let's say it is just ultra "bearish" now. One level that would definitely be likely for an impotent retrace or a spike wick is this $8.3 level. Fairly hairy to short on leverage though.
You could always do calls on the KOLD ETF or puts on the BOIL ETF (Bloomberg x2 leverage bull/bear) and then your risk is limited to the size of the options contract and you don't have to worry about getting liquidated if it does rip to $9.
ملاحظة
Looks like we can thank Russia mobilizing 300,000 troops in the war in Ukraine for the brewing bounce.But on the other hand, you have to ask yourselves, with all the AI data analysis, did the massive LNG/oil firms and other smart money traders not anticipate an escalation?
The only thing that will truly surprise the markets is the fall of the Chinese Communist Party and genuinely unscheduled natural disasters.
Failing those two factors, news is there to frontrun for what is already arranged to occur.
ملاحظة
Well, natural gas is now in target #2 with virtually no bounce whatsoever.An annoying change of winds considering NG and WTI's propensity to rip bear faces off every chance it gets.
Is it going to run to $5.5 and then 4x in a straight line for monthly contract settlement?
It might. But it kind of already did that back when Freeport first exploded.
Either way, something I keep in mind is that upside pivots being taken out is actually bearish confirmation until downside price target has been achieved.
Now you just have to figure out what the downside price target really is.
ملاحظة
Word from German media is the Nord Stream twin pipelines have been damaged on the seafloor:twitter.com/Faytuks/status/1574528767984377856
Convenient that happens the same day as US NG hits $6.8 in the bottom of the retrace box.
There's also some hurricanes on the way for the US, which may be used as an excuse to bounce WTI and NG.
ملاحظة
Natural Gas looks certain for a significant bounce, especially after painting these close proximity 4H double bottom wicks.I suspect $7.5 is imminent. However, I don't believe the MMs will leave $6 alone before the next moon.
I think the OPEC+ cuts are a "sell the news" event, but after oil rallies a bit more. I'm waiting to see if it will take out the $91 September double top.
What I would do if I were the United States, when facing economic warfare that's attempting to drive up inflation, is I would dump energy.
The idea is, "Okay, OPEC, you want to make less oil? Well, okay, you do you. But you'll get less money per barrel, so keep up the good work."
If you see NG and WTI fail to sustain a rally while Nasdaq starts to pump, then that's the red alert signal. NG <$5 and WTI <$60 is en route.
What happens next week will set the stage for the rest of 2022.
ملاحظة
Target 3 finally achieved. Now, can they kill the July low? (Yes)
ملاحظة
Yes, they killed the July low. I think you can scalp under $5 for the first time with a target at/above the July low heading into monthly close. I have to say that the way NG bounced and bounced and bounced for so long before it finally started to head downwards really threw me off and made it so that I was psychologically unable to trade my own call even remotely effectively.
What I expect to see with this in the short to medium term is consolidation and more dumpy that comes on the heels of WTI $50~.
After that you want to be neck deep on energy because war and social credit is coming.
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