Potential signal:
- The natural gas market is in free fall. However, I think we have a situation where the value hunters come back into the market.
- I am willing to “dip my toes into the market” at $2.
- I would have a stop loss at $1.50. I would aim for $3.33 above. This is an investment, not a quick trade.
Natural gas markets plunged during the early hours on Wednesday as it looks like we are going to race towards the $2 level. Ultimately, I do think this is an interesting area and I do think that eventually we will bounce. That bounce is probably something that could be invested in. That's the thing though, you need to understand it needs to be thought of as an investment. It's not some type of quick smash and grab type trade.
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After all, it's probably worth noting that you have a scenario where people will continue to worry about the cyclicality of the market. Quite frankly, natural gas typically loses a lot of momentum in the summertime. And although we had recently seen that had a lot to do with the idea of a heat wave. Well, the heat waves have come and gone, and therefore I think it's probably likely to be a situation where we return to norms.
Later This Year, We Rise Again
Later this summer, as we head into fall, I think it's very likely that we will eventually see the natural gas market bounce quite nicely. It typically does as traders are looking for heating demand to accelerate pricing. That is exactly how I am looking at this market as one that you have to kind of look at through the prism of an investment. And therefore, you have to look at it through the prism of hanging on to it was no leverage. I'm personally involved in an ETF. I am willing to buy into a bounce. I've already made a profit or at least half of my profit previously. Now I'm getting closer to breaking even, that's fine. This is something that I think really pays off later this summer, but if you have a way to play it with no or very little leverage, you could really come out quite nicely, especially as fall hits. We'll have to wait and see whether or not the market takes all of this into account.
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