Pascal
09-15-2011, 12:39 PM
I received the following e-mail from a reader of the daily comment of September 14.
Before discussing this interesting message, I want to stress that I do not give personalized advises.
This is too much responsibility and I noticed that the more advises I gave in the past the more requests/questions would consecutively come. What I share in the daily comments is my own market analysis upon which I base the trades that I execute independently of the IWM/GDX robots.
The message is here:
Yesterday I bought my first trade based on your comments that natural gas makes
for a high probability long trade. During the recent hours, however, natural gas prices
have fallen through the floor and have lost a lot. Is there a logical explanation for this
and do you think I should cut my losses and sell right away or wait for the volatility to
fade? Also, if it is expected to go up, would you expect $4.60 to be a good upside target?
A first trade is very important and is usually a loss. You need to keep this loss small and survive for another trade.
On my comment of yesterday, I did not advise to buy Nat gas, but to buy Nat gas producers (I stated SWN, UPL and ECA. I myself bought SWN/UPL), because the market was ready to bounce and these would get the extra juice from a Nat gas futures buying activity. You can see that even if Nat gas dipped today, these stocks did not.
Regarding the Nat Gas trade, I believe that you should take your loss if the price breaks below support (which I doubt it will) or if the TEV breaks below its average, which is certainly a possibility. The most difficult is to manage this together with contract roll-overs.
As a reminder for everyone here: do not trade the UNG/USO ETFs, because they need to roll their contracts and hence incur losses. You can see that on the comparison to their respective Futures prices.
Pascal
10424
1042310425
Before discussing this interesting message, I want to stress that I do not give personalized advises.
This is too much responsibility and I noticed that the more advises I gave in the past the more requests/questions would consecutively come. What I share in the daily comments is my own market analysis upon which I base the trades that I execute independently of the IWM/GDX robots.
The message is here:
Yesterday I bought my first trade based on your comments that natural gas makes
for a high probability long trade. During the recent hours, however, natural gas prices
have fallen through the floor and have lost a lot. Is there a logical explanation for this
and do you think I should cut my losses and sell right away or wait for the volatility to
fade? Also, if it is expected to go up, would you expect $4.60 to be a good upside target?
A first trade is very important and is usually a loss. You need to keep this loss small and survive for another trade.
On my comment of yesterday, I did not advise to buy Nat gas, but to buy Nat gas producers (I stated SWN, UPL and ECA. I myself bought SWN/UPL), because the market was ready to bounce and these would get the extra juice from a Nat gas futures buying activity. You can see that even if Nat gas dipped today, these stocks did not.
Regarding the Nat Gas trade, I believe that you should take your loss if the price breaks below support (which I doubt it will) or if the TEV breaks below its average, which is certainly a possibility. The most difficult is to manage this together with contract roll-overs.
As a reminder for everyone here: do not trade the UNG/USO ETFs, because they need to roll their contracts and hence incur losses. You can see that on the comparison to their respective Futures prices.
Pascal
10424
1042310425