Natural gas markets sold off during the trading session on Thursday as we continue to see massive bearish pressure. Quite frankly, at this point I think that if you are trying to short this market, you are chasing the trade, one of the best ways to lose money.
Natural gas markets got hammered again during the trading session on Thursday, losing over 2%, as we continue to see people jumping out of this market and shorting it based upon the idea of warmer temperatures in the United States, and perhaps a lowering of global demand as it looks like we are going to see a slowing down of economic activity. This means that manufacturers and factories simply won’t need as much energy. Beyond that, crude oil is very cheap and quite frankly there may be people out there betting on the idea of crude oil being used more readily than natural gas.
That being said, there is a gap above, which centers around the $3.25 region. Rallies from this point should end up being selling opportunities inside of that, as it is an area where I think people will be looking to jump back into the downside. I have no interest in shorting this market, at least at this point as we had gotten too far ahead of ourselves. After a rally, that gives you the opportunity to build up a little bit of momentum and continue to go lower.
As far as buying is concerned, I don’t think that’s going to be possible although I fully anticipate some type of bounce. However, look at that bounce more as an opportunity to get involved, not necessarily something that you need to be taking part of. Fade rallies, it’s worked for quite some time.
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