no reason nov should be 6.42 right now. Spot is 4.40 today, 20 some days before expiration. inventories are up, reports are bearish, and this price is way off base. I think it would be reasonable to expect Nov to close 5.50-5.75 and spot to come up in the next 3 weeks. this week's buying is purely technical. i scaled in a short trade over the past week against me and did a little range trading.. entries at 5.55, 5.68, 5,78, 5.92, 6.11 and final sale at 6.42 today. overall the position is quite deep against me, but there is no fundamental reason this should be so high. fundamentals always reign supreme in the end. next time, I'll scale in my entries a bit wider apart and not hurry my sell orders (by bringing them down to lower resistance levels).
SCRIABINOP23--------Congratulations! You sold the top in the market 6 times so far. Remember, THE MARKET reigns supreme in the end, not fundamentals.
"no reason nov should be 6.42 right now" Uh, say what ?? .. if there is "no reason why nov should be 6.42 right now"... it wouldn't be at 6.42. If it is at 6.42, there IS a reason why it should be there ... trying to tell everybody that the market is wrong won't help your account very much. Personaly, I do think nat gas will continue to move North. In any case, whatever the market does, I will just do my best to react accordingly and NEVER tell the market that it is wrong. ... a friendly word of advice; go with the flow, the market won't listen to you.
do you realize it is supposed to snow next week. Colder than average. Big oil needs to make some profits somewhere. They have agreed to allow OIL and gasoline to trade down for the elections. Perhaps Bush has given them permission to make up this lost revenue with higher Nat Gas prices.
So what is on the table? What is the market really telling us? This chart could provide some insight. Who has a better grasp on what is occuring? A trader that uses many indicators or a trader who understands price?
Tell that to the Oct longs --- it closed near spot 4.10 or so. PS I am range trading this with part of my position, so I'm not doing too bad. 6.45 - 6.10 is the expected range this week.
I'll correct myself -- nov nat gas is at 6.42 on pure technicals. That is the reason. btw, the market is merely not in sync with the fundamentals - nothing inherently wrong with that, just a trading opportunity. this is a silly suggestion to assume the price is right just because that is the current price. this is why we traders take positions - because we see pricing inefficiencies. In the end, the fundamentals win. in the short term, yes, they often don't - and thats how I define opportunity. perhaps taking short trades against the technicals was a weak move on my part - I won't argue that - but fundamentally my position holds water until we have record blizzards and nat. gas withdrawals from storage in the next 2 weeks. And PS - my heaviest entry so far is at 6.42.
"I'll correct myself -- oct nat gas is at 6.42 on pure technicals. That is the reason." ... well, "pure technicals" or not, this is where the market is and this is what we are dealt. By the way, what makes you say it is "pure technicals" ? How do you know there anren't commercial transactions that justify this level ? ... you can't. (by the way, when average wellhead prices are at about 6.40 as they are now, I'd be inclined to say that the futures prices are rather low.. they were even at a wellhead discound under 6.40) Trying to explain why the market is wrong is futile. Just deal with it and move on.
You need to do a little homework. Wellhead spot prices are at 4.40 avg right now, not 6.40. In many places under 4. That is the primary basis of this trade. When spot prices suddenly meet or exceed my entries based on genuine market drivers that hold, I'll reconsider. Right now, though, they are very far away, and that is telling me one market (present) (which at expiration usually connects with the other) does not agree with the other market (futures). In fact, spot dropped some .30 yesterday after futures went back to peak. If you can endure (or even play) the volatility here, there is a lot of opportunity. All these weak traders with overleveraged and tightly stopped positions are the ones who provide that. You can't sincerely be telling me the market is sure of price right now when in the last two days giant buy sell spikes occur between 6.30-6.00 (and 6.45-6.05) range. This is a joyride. www.theice.com/marketdata/naNaturalGas/naIndex.jsp