15
Dec

Wrap – Week Ended 12/14/18

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Sloppy, Very Sloppy.   Tax loss selling pressure far exceeding moves in the commodities. 

Questions and comments under The Wrap will be addressed in the Monday Post.

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10 Responses to “Wrap – Week Ended 12/14/18”

  1. 1
    Baylor Says:

    CRK back close to where Jerry Jones got involved. May be compelling. More than doubled from there a few months back and round tripped since

     

  2. 2
    Jerome Blank Says:

    Technical observations in the nat gas market. I don;t think I'm saying anything that isn't obvious, but for purposes of discussion, especially if your long or holding gas dependent equities, the tone turned decisively bearish once the end of December temps failed to impress on the cold side. The market really needs some of that frigid air trapped up in Canada to make it down toward the East coast in early January and then hang around for more than a day to rack up HDD(s) and to again to change the near term tone and price action. My experience is the East coast is really the only thing that matters from a futures perspective.

    That wedge that developed from the beginning of November in the front month/cont future had to break one way or the other, which it did, down on 12/11, it retested the $4.30 point, mentioned last week, almost exactly the next day and rejected. A number of interesting things going on technically. When it comes to nat gas futures, I like to modify the traditional point and figure charting box size to 10 cent vs. traditional 25 cents. This is better for daily chart work. I also find this to be more effective when working with standard charting comparisons.

    Nat gas actually printed its first sell signal on 11/26/18 at $4.20, however in the context of the developing wedge which you could make out on the traditional daily chart, I could see still holding that long position, which I did, especially in the context of the then bullish optimism. I was thinking bear trap at the time.

    For the next 10 trading days the wedge continued to tighten, until last week when the market turned decisively bearish, I can remember the exact moment, breaking $4.20 again on 12/12, now a strong P&F sell signal and indication to cover an even go short. I was stopped out on the futures on this 2nd run thru $4.20 and initiated a bear futures spread, which so far has been working out well. Bulls need a strong suggestion that the cold bottled up north is coming down to change near term sentiment.

    With the wedge break, technically the standard chart pattern now suggests an final target of $3.25, which correlates interestingly with Zman's average price target for 2019. There is interim near term P&F correlated support zone at the big round number of $3.50, the March contract is almost there already. If weather cooperates, this might hold, if the front month can hold $3.50, it stays above P&F trendline support on both the 10 cent and 25 cent chart, that's a meaningful support zone. Otherwise, if January looks warm nothing stopping the $3.25 level.

     

  3. 3
    elduque Says:

    thanks JB. 

    Z is there any chance you could give us a new permian sheet with the latest prices. 

  4. 4
    brodway Says:

    Jerome…

    everything you are saying is accurate, but what i feel is depressing the markets is complacency of cheap gas and continued notion that gas is abundant and readily available. there doesn't seem to be a scare in the world that moves the gas needle for any sort of prolonged period of time. if that changes i think there will be a great amount of profit to be made in the nat gas equities. in the interim, i like the midstream names as they are taking advantage of transporting ever increasing use of gas 

  5. 5
    zman Says:

    re 3 – yes

    re 1 – thanks, have not read yet, out of the office, will look tonight

  6. 6
    brodway Says:

    from a technical perspective, S&P has now broke 2600 down to around 2580 and retested a figure clos to this on Friday…..i think markets are waiting for a dependable bottom before initiating new positions. S&P has corrected over 12% off the 2018 highs, still within correction levels. based on US economy my guess is that it holds somewhere above 2500 until news flow confirms the US economy is not slowing down

  7. 7
    brodway Says:

    to add to 4

    i think ZLT's lowish exposure to nat gas has been the right call. i've personally took down my nat gas exposure to 10% and have increased my midstream exposure from 0 to 10%. 

    thanks to Nrgyman for his insight into the midstream space. 

  8. 8
    Baylor Says:

    Re 7 – broadway which ones you like?  I’ve been accumulating ET

     

  9. 9
    brodway Says:

    i own ET and EQT looking at AMGP now based on the last note from Nrgyman upcoming transition there should yield closer to 9%

  10. 10
    brodway Says:

    should have said EQM

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