March Natural Gas is up 1.7 cents at $5.40 this morning as I write. The included chart shows that March Natural Gas has run right into the blue 90 day exponential moving average and stalled for now. The rally that began last Friday is happening because of the severe cold weather in the northern states of the US. That cold weather spell is expected to last into December 22nd according to weather forecasters, before temperatures moderate. I believe that for natural gas to sustain a consistent longer term rally, the weather will need to stay well below normal for the next couple of months, which I think is next to impossible. We shall see. All I know is that supplies of natural gas are about 800 billion cubic feet too high. The directional movement indicators are bullish but the ADX line continues to fall showing a lack of trend strength. The view here is that this is just a rally in a bear market. Until I see some proof that this market wants to start making higher highs and higher lows, natural gas is still in a long term bear market. Continue to stand aside and take liquidate long positions in this rally if you are long.
David Hall
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