The outlook for natural gas seems to come up – pardon the pun- when I am speaking to a group like last week at the Markham public library (great event, by the way folks). So I thought it might be an idea to cover this topic on a blog. While I do have some gas (those burritos will do it every time!) – via a gas-focused energy stock, I am fairly light in exposure to this commodity.
The chart above shows us a long termed chart of spot gas. As you can see, gas looks to be forming a head and shoulders bottom at this time. Its neckline comes in right around the old support level at around $5.00. Gas needs to break like the wind out of its bottom formation in order to become bullish. I don’t want to make a big stink about it, but gas bulls may be full of hot air until that happens.
The daily chart above suggests that such a breakout may not be in the cards just yet. Moneyflow, as illustrated by Chalkins oscillator (top pane) and the Accumulation/Distribution cumulative line (bottom pane) are bearish. While we may get a short termed pop in price due to near termed oversold conditions (see the 3 momentum studies directly below the chart: Stochastics, RSI, MACD), we need some volume and money flowing into natural gas, and a break of $5.00, before we can call this an upside trading opportunity.
Natural gas is worth watching at this time. Meanwhile, I’ll keep sniffing around for new opportunities for the readers of this blog site.
By the way, mark your calendar for next Tuesday May 27th – I will be on BNN’s MarketCall Tonight show at 6:00PM on that date.
Hi Keith, it was a pleasure to meet you in person at the library event last week.
From your analysis above, I’m guessing you wouldn’t be short natgas either as there isn’t a definitive direction, correct?
Keith, it was a pleasure hearing you speak at the library last week. Thanks for the autograph too!
Based on your analysis above, you wouldn’t be short NATGAS either correct?
Waiting for a defined trend? i.e. confirms / breaks above the neck line of the inverted H&S?
Thanks and appreciate your information!
Adam – that is correct. Nat gas is at a vital point right now. It either breaks $5 to complete a bottom formantion, or it finds resisntance and falls. Its too close to call to go long or short at this point.