Although we’d be thrilled to be able to brag a year from now that a trade we recently advised in Natural Gas futures caught a bear-market low within two cents, we’re not prepared to bet the farm on it. Similarly, a winning gold trade that got stopped out earlier in the week may have caused us to miss a moon shot, but we’re not about to look back. For when all is said and done, we’d rather not be prayerfully holding our breath or losing sleep as gold in particular swoons, leaps, caroms and careens its way higher. Aggravation and stress aside, on a simple risk:reward basis there is never justification for buy-and-hold speculation. Yeah, we’ve heard the story about the commodity whiz who made $50 million riding a brahma bull in soybeans/cattle futures/crude oil all the way to the top. But the guy couldn’t possibly have made all of that money without experiencing devastating setbacks along the way. And he could not have kept doubling down on subsequent trades without giving it all back. In our book, it is slowly but surely that wins the race, and the massage we preach to subscribers and students who take the Hidden Pivot Course is to never risk more than $1 to make $3. This applies along the entire route of a trade, from entry to exit. Moreover, we recommend that positions be constantly “worked” so that s trader’s hard-won gains will not be entirely and constantly at risk. » Read the full article
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Natural Gas
The March futures are within pennies of achieving the uber-bearish 2.305 target given here around Thanksgiving, when they were trading nearly 60% higher. While there can be no guarantees that a major bear rally is about to unfold, it is an opportune moment for camouflageurs to hunker down on the lesser charts, there to await a potentially tradable turn. _______ UPDATE: I posted the following in the chat room shortly after 1 a.m. EST: To see (almost) exactly the kind of opportunity I’m talking about, locate the following NGH12 coordinates on the three-minute chart: A=2.334 at 9:30 p.m. EST; B=2.350 at 9:54 p.m., and C=2.343 at 10:09 p.m. If you spotted the flaw — a two-bar point ‘C’ — then go to the head of the class. The bad news is that if the little sonofabitch is not giving us exactly the pattern we want on the first instance of an upturn on the very lesser charts, it’s going to be tricky to get on board. Regardless, I’d stick with the ‘3′ to find a way aboard. Click here to find out about the upcoming Hidden Pivot Webinar and receive a $50 discount.
Natural gas quotes have been in a death spiral for so long that it’s probably time to start paying attention. I’ve sketched out a detailed ‘camouflage’ scenario in the chart accompanying today’s tout, including a specific screen alert that could help you get long. Check it out if you want to see what low-hanging fruit looks like.
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Traders could have caught a nice ride yesterday from an interim low at 3.387, since it fell within 0.003 points of a Hidden Pivot support flagged in the chat room by ‘Pivoteer’ and amplified in my tout. The subsequent bounce would have been worth as much as $500 per contract if you’d exited before the futures relapsed down to a so-far low of 3.325 Wednesday night. That’s a penny beneath my worst-case bottom, but I still expect a major rally from very near these levels, so camouflageurs are advised to remain diligent. I’ll suggest using the 5-minute chart, since the bars are very thin if you go any lower. If you’d prefer to use UNG, the NatGas ETF, the 7.32 pivot given here yesterday is still the place to look for a tradable turn. ______ UPDATE (11:35 a.m. EST): A ‘camo’ pattern launched at 4:50 a.m. from 3.341 would have triggered a long from 3.386. Half of a four-contract position would have been exited at the ‘p’ midpoint of the pattern, 3.401, and a third contract at 3.430, the ‘D’ target. The remaining contract, adjusted for theoretical gains thus far of 7.50 cents, has an effective cost basis of 3.311. Let it ride for now with a fixed stop at 3.345.
There was some interest in forecasting Natural Gas prices in the chat room yesterday, so I decided to take a crack at it myself. Lo, the moderately big picture, vivid in the 240-minute chart I’ve reproduced alongside, suggests the December contract is close to a potentially important low. The actual low so far has already exceeded my Hidden Pivot target at 3.416, but not by much, and the pattern itself is sufficiently clear that we should expect a tradable price reversal from somewhere near current levels. Please note that I have allowed room for a somewhat lower low at 3.336 that would result if we use a plausible higher ‘A’ as the starting point of this down-cycle. Let’s try to get long using camouflage tactics near the 3.384 midpoint (5-min, A=3.456, B=3.390, C=3.417) of a pattern identified in the chat room by ‘Pivoteer’.
FYI, an ETF said in the chat room to mimic NatGas futures bears the symbol UNG. If it were to bottom at a target equivalent to the one above at 3.416, the turn would come at around 7.32. This is caveat emptor, since, as I’ve been warning subscribers for years, ETFs were created for the sole purpose of shorting puts and calls to rubes.
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Natural gas might have made an important low recently. After its major high in mid-2008, the price of the clean-burning fuel declined by more than 80% over a fifteen-month period. A large bounce (in percentage terms) gave way to another downtrend which has lasted throughout 2010. Recent price action raises the possibility that natural gas has made an important secondary low and that it might be ready to join the bullish party that most other commodities have been enjoying. The futures are trading just below the midpoint (at 4.008) of a pattern which began with a powerful short-covering rally that peaked a week ago. If the sibling “D” target of 4.274 is reached, additional prior highs will be taken out, and the recent low of $3.50 will begin to look very important. Traders should watch for smaller patterns to provide opportunities to get long. The “D” target might present a chance for shorting with a tight stop (probably no higher than 4.281), but if the futures get that high, traders should take seriously the odds that a najor new uptrend has begun. (Posted by Doug McLagan)
Natural Gas futures have been on quite a tear lately, but the rally will face its first challenge in the form of a Hidden Pivot resistance at 4.485 (basis July). The pivot lies not far above current levels and should contain the move for at least an hour or two. If not and the futures blow right past it, take it is a sign that more strength is coming.
An Elusive Bear Market Low in Natural Gas
by Rick Ackerman on February 2, 2012 3:32 am GMT · 13 comments
Natural Gas futures were trading for around 3.58 in November when we projected a possible bear-market low at $2.30. Imagine our excitement when, ten days ago, on January 23, the March futures contract trampolined from within exactly 1.6 cents of our target, shattering the despair and deathly calm of a relentless, multiyear sinking spell that had not seen respite since last spring. The initial leap was enormous, to 2.63, and anyone who bought down around the target would have reaped a $3400 profit per contract on the first day of the move. We had prepared subscribers for a potentially tradable bounce, reiterating our contrary stance on January 12 with this advice: The futures were barely able to muster a dead-cat bounce on that last effort. Even so, the 2.305 will remain a good place to try bottom-fishing aggressively with our habitual penny-ante stop-loss. At the time, the futures had been falling, falling, falling, but they were still well above our target, trading around 2.80. However, the next week saw them plunge, kamikaze-style, precisely to the Hidden Pivot support where we had anticipated a turn. » Read the full article