Memorial Archives

Knife-Catching Follow Up
posted Apr 12, 2006 at 12:03AM

I don't know why I brought it up in the first place. I don't trade these futures myself. But since I did, i feel some obligation to keep track of what is going on. I gusess at the time with most "things" going up, I was fascinated by natural gas just falling off a cliff.

If you remember I suggested keeping an eye on the 18ema, and that a break of that resistance metric could be used as a buy signal. It was a tactic that worked quite well on the HUI back in last May.

Well the price action since that break has been less than impressive. I guess one can argue that this could be a bottoming formation. But one could also argue that this is a bear channel...that is breaking down.

Not all trades work out. They key is to keep losses small. If this was my money on the table, I would be taking it off here and take the small loss and go look for other charts.

A new low to me, from an EWA standpoint, could be signalling the start of a new impulse south.

Again this is not a fundmental analysis ... I know nothing of what the inventory levels are or when one should start playing the hurricane season.

Looking at past history shows that this price action can be a prelude to higher prices at least from a short term trading perspective... but I do not like the fact that it has broken short term trend-line support. The risk factor is going way up.

50-50 is not good enough in my mind. You want the odds in your favour.

So if you are in natural gas take a good hard look of what potential damage to your overall portfolio could be if this tanks. This is not the time or place to risk the kid's education fund.

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