It currently trades around $36.30 - up from the $32 area when I last wrote you - and is a great “cheaper” alternative to the high-priced arena of futures and futures options, while still following the same movement as the oil market.
Hurricane Season Could Blow A Bull Market Our Way
As the first tropical storm forms in the Atlantic, it’s a clear reminder that the natural gas market could also be set to blow into action.
In fact, the market has already been volatile. It shot from a low of $3.400/MMB/tu to a high of $4.690/MMB/tu and back down to $3.500/MMB/tu again - all within the space of a month!
That kind of volatility doesn’t seem to be going anywhere anytime soon. After the government released its weekly supply numbers last Thursday, which showed a less-than-expected buildup of natural gas supplies, we saw another crazy climb of over 300 points to its current level of $4.020/MMB/tu.
If you look at the daily chart below, the technicals show that we’re reaching a critical juncture. This is the first time since July 2008 that the 20-day moving average has crossed over the 50-day moving average line. If it continues, it could just foreshadow an end to this monster downtrend and usher in a more permanent change in market direction.
I’ve foreseen natural gas moving higher for some time now, and between the chart patterns and hurricane season, I believe it should start in earnest anytime now.
You can participate in this market by using United States Natural Gas (NYSE: UNG), the natural gas ETF that reacts just like the futures and futures options.
