NGH13

I was persuaded by discussion in the chat room yesterday to give Natural Gas futures more coverage, since a contract margined for about $800 would seem to offer a pretty good bang for the buck.  That said, we shouldn't have any illusions about catching a major trend, since this vehicle has been chopping and thrashing within an 80-cent range for more than a year.  That won't prevent our jumping on promising trades via camouflage and trading both sides of the market, however.  For now, that implies zooming down to the five-minute chart, where 'external' peaks nicely suited to our purpose have begun to take shape. The one I have in mind lies at 3.258, and any b-c pullback from just above it could yield the kind of very low-risk entry opportunity we thrive on.  I've sketched it out hypothetically for the benefit of night owls, since this trade has a chance of triggering in the wee hours. _______ UPDATE (10:47 a.m. EST):  The first camo 'buy' signal occurred at 3.264 at around 5:20 a.m. EST. On the 5-minute chart, the coordinates are as follows: A=3.252 (4:40 a.m.): B=3.265 (5:05 a.m.); C=3.260.  You'll notice that point 'C' low blends traits of the 'atrocity' low with what could initially have been mistaken for a fine single bar.  This set-up was good enough for government work, for sure. More seriously, and putting the pattern's point C flaw aside, you will rarely go wrong buying impulsive rallies that are this subtle, especially if you do so early in the life of the new trend.  I am not establishing tracking guidance, however, because of the silly time of day the opportunity occurred, and because of the somewhat dubious provenance of point 'C'.  I've refreshed the chart to show how the set-up developed.

A classic pattern on the daily March natural gas futures chart gives us a target at 3.178 which offers good odds to bottom-fishers.  The pattern began with an 'A' point of 4.036 on November 22 of last year, a day when someone was obviously trading futures instead of eating turkey or remembering John F. Kennedy.  The sharp decline of almost 25% kept to its holiday theme by bottoming on New Year's Day, again during electronic trading.  A vigorous bounce followed by another decline has moved the futures toward our midpoint pivot, which ought to be given a good ten or more ticks of leeway with a sell-stop, in light of the large size of the pattern.  If the market goes very far below the pivot, our method tells us to expect a drop to 2.710, a level that the March contract has never seen.  (Posted by Doug “harry” McLagan)

The futures have just tripped their third buy-signal in a year on the daily chart, and even though this may prove to have been a false alert, there is probably money to be made trading from the long side. The actual signal came at the 3.3673 point 'X' shown, so camouflageurs should focus on buy-side opportunities here. My hunch is that the move will get to p=3.503, at least, without stopping out those who have boarded thus far -- a 'successful' trade by our definition. (A 'winner' is a camo trade that gets to 'D' or higher.)