Natural Gas at the daily view.
Natural gas spiked up today which shouldn't be a surprise. It's about time if I may add. Natural gas had an inverse head and shoulders pattern in the last 3 months and it would skyrocket above $1.89. And that's what happened.
Natural gas was in a volatility box for 3 months. It was building up energy for a breakout. That breakout is seasonal. Where did this demand come from? Air conditioning and energy usage.
How so? Hot summers demand more air conditioning. A/C requires more energy usage. The increased energy usage causes more demand in gas. We are at the hottest part of the summer now. Gas is in season.
Despite popular myth, vehicle usage makes up less than 1% of natural gas usage. It's buildings, factories, and homes that have the most usage.
Usually, this is the summer spike at the monthly view. It tends to pullback during September then ramp up again in October to January. It's very obvious why gas would be used more in those months.
This is why I suggest traders to widen their horizons. Traders who pay attention to equity only just missed out on a potential 30-60% profit today with natural gas. There should be one more day of continuation. However, the high probability, high rewards bounce was back at $1.70 or below.
Personally I would not short natural gas unless you know the seasonality like the back of your hand. That takes months to get it to a science. In addition, we are at near historic lows. There is a lot more upside potential in natural gas at this level than the downside.
Why? I don't see natural gas getting replaced anytime soon. I don't see SBSP or fusion technology being developed anytime soon. The only alternative that I see for natural gas with the same or greater output is nuclear energy. Side note, nuclear power plants came a very long way in safety and containment over the last 30 years. I'm actually impressed and it broke down my own assumptions. That's from personal experience. Here is a Ted Talk video to fully express what I mean.
www.ted.com/tal...t_nuclear_power?language=e...
Natural gas spiked up today which shouldn't be a surprise. It's about time if I may add. Natural gas had an inverse head and shoulders pattern in the last 3 months and it would skyrocket above $1.89. And that's what happened.
Natural gas was in a volatility box for 3 months. It was building up energy for a breakout. That breakout is seasonal. Where did this demand come from? Air conditioning and energy usage.
How so? Hot summers demand more air conditioning. A/C requires more energy usage. The increased energy usage causes more demand in gas. We are at the hottest part of the summer now. Gas is in season.
Despite popular myth, vehicle usage makes up less than 1% of natural gas usage. It's buildings, factories, and homes that have the most usage.
Usually, this is the summer spike at the monthly view. It tends to pullback during September then ramp up again in October to January. It's very obvious why gas would be used more in those months.
This is why I suggest traders to widen their horizons. Traders who pay attention to equity only just missed out on a potential 30-60% profit today with natural gas. There should be one more day of continuation. However, the high probability, high rewards bounce was back at $1.70 or below.
Personally I would not short natural gas unless you know the seasonality like the back of your hand. That takes months to get it to a science. In addition, we are at near historic lows. There is a lot more upside potential in natural gas at this level than the downside.
Why? I don't see natural gas getting replaced anytime soon. I don't see SBSP or fusion technology being developed anytime soon. The only alternative that I see for natural gas with the same or greater output is nuclear energy. Side note, nuclear power plants came a very long way in safety and containment over the last 30 years. I'm actually impressed and it broke down my own assumptions. That's from personal experience. Here is a Ted Talk video to fully express what I mean.
www.ted.com/tal...t_nuclear_power?language=e...