Continue to Show Signs of Weak

Natural gas markets continue to show a lot of negativity, breaking below the $3.00 level. The market has rolled over quite drastically to get to this point, as we have wiped out the seasonality of bullishness.

Natural gas markets gapped a bit lower during the first major session of the new year, showing signs of weakness yet again. The market has broken below the $3.00 level, which of course is a psychological barrier, but at the end of the day I think there’s probably plenty of bearish pressure above that we can take advantage of. The energy markets have been absolutely hammered lately, and therefore I think you could probably get a bounce.

That bounce should be a nice selling opportunity though, as we have seen so much destruction to the bullish case scenario. There is concern about global demand for energy as weaker than anticipated economic figures coming out of China has really put a dent into the marketplace overall. Natural gas is going to contend with warmer than anticipated temperatures in the United States, and of course the 800 pound gorilla in the room: the fact that there is over 300 years’ worth of natural gas in the ground in America alone. Canada has even more. In other words, this is a market that I don’t have any interest in buying unless it’s a short-term trade, but longer-term I have more of a negative bias and I don’t know that it will change anytime soon.

I don’t think we break down below the $2.50 level underneath though, because that has been such a massive support. There comes a point that the market gets so cheap that producer stop producing, and therefore supply dries up for a temporary move. Because of this, I look at elevated prices as a gift that I can start selling.

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