Undecided?

Are you one of those undecided voters that I've heard about? Well if you are maybe you should watch this.

https://www.youtube.com/watch?v=6TiXUF9xbTo&feature=player_embedded

I hope this can help you decide. The future of our great country is depending on you!

GASL update

I use quite a few posts to point out what I think may be good trades or even good investments but at heart I am a trader. So I only want to be around for the profits, not the losses.

I don't talk much about when to exit a trade. This may be because it is the hardest part of trading. The entries are relatively easy to spot. The exits not so much. The main thing about exiting is to remember why the trade was put on in the first place. When those conditions change the trade is no longer valid as a trade. This rule applies to "investing" as well, defined in my mind as a longer time frame trade usually based more on fundamentals as opposed to technical indicators. Keep in mind what your "edge" is. The traders edge is the basis of his advantage in the market. My edge is an ability to see momentum in the price and volume and to curb my emotions and remember my "edge". (the second part is the hardest)

A while ago I pointed out the volume bulge in GASL and used it as an indicator of a bottom forming in this security. GASL corresponds to the gas producers Anadarko Pete (ANP) and Apache(APA).

There probably is a bottom forming in these stocks. But the move up is some time away. I had established a position in GASL and was waiting for an anticipated strong move up. There was a break to the upside and the expected pullback to a range. Then the price broke up out of the range but the volume was pathetic. This indicated to me that the enthusiasm for this security was not there. And that meant that all the "me's" out there were probably going to throw in the towel. I wanted to be the first if that started to happen. It is important to recognize when the "big money" is buying, but it is also important to recognize that there is a lot of "little" money that can stampede without continued support of the big players, whose timeframe is longer.
So I have exited this trade with a decent profit, but not the size I had expected.  Now I must look for signs of renewed momentum if I want to put on another position in this security. I don't know when that may be. The danger is that this security becomes a favorite and I let my judgement get clouded by my past hopes!
I hope the chart makes sense:

gh

FEMA is insurance.

A good editorial in the New York Times.

Using national resources to rescue states has always made sense. It is about spreading the risk. That is what the concept of insurance is all about. Spreading the risk over the largest population to support local populations or individuals in time of defined need.

Where is our national health care plan?

http://www.nytimes.com/2012/10/30/opinion/a-big-storm-requires-big-government.html?_r=0

See you tomorrow.
gh

What happens in 'Vegas?

Home sales up. Oil down. Gasoline under pressure.

DATA SNAP: U.S. New Home Sales Jump 5.7% in Sept

==========================================================
New Home Sales Sep Aug ! Consensus: !
Overall Sales: 389K 368Kr ! 386K !
Percentage Change: +5.7% -1.3%r ! Actual: !
Months' Supply: 4.5 4.7r ! 389K !
==========================================================

By Sarah Portlock and Eric Morath

WASHINGTON--Sales of newly built homes in the U.S. rose to its highest level in more than two years, continuing evidence that the housing market is picking up steam amid an otherwise slow recovery.
New single-family home sales increased by 5.7% last month from August to a seasonally adjusted annual rate of 389,000, the Commerce Department said Wednesday. It is the highest level since April 2010, when first-time home buyers were rushing to qualify for a tax credit.
New home sales were up 27.1% compared to the same month a year ago.
The September results were above expectations. Economists surveyed by Dow Jones Newswires had forecast an annual sales rate of 386,000.
The number of new homes listed for sale, seasonally adjusted, at the end of September was 145,000, a supply that would take 4.5 months to deplete at the current sales pace. That is the lowest rate since October 2005.
Low inventory and solid sales could encourage home builders to increase construction, which would be a boon to the overall economy.
The median price for a new home in September was $242,400, down from $250,400 the previous month, the Commerce Department said.
However, in a separate measure Tuesday, U.S. home prices rose for the seventh straight month in August, up 0.7% on a seasonally adjusted basis from a month earlier, according to the Federal Housing Finance Agency's monthly home-price index. That is calculated by using the prices of houses purchased with mortgages backed by government-controlled mortgage companies Fannie Mae (FNMA) and Freddie Mac (FMCC).
In another positive sign, construction of new homes jumped 15% last month to the highest level since July 2008, the Commerce Department said last week. Compared with a year earlier, new construction was up by nearly 35%.
But the housing market still has a long way to go before it fully recovers. Sales and construction levels are well below pre-bubble levels and tightened credit restrictions make it difficult to secure a mortgage. Many prospective homeowners have too little home-equity to sell their current residence and buy another home.
New-home sales peaked in July 2005, when they hit an annual pace of nearly 1.4 million, and declined sharply in the run up to the financial crisis. Last year's level of 306,000 sales was the lowest on record.
September's new-home sales rose in three out of the four U.S. regions. Sales grew 16.7% in the Northeast, 16.8% in the South and 3.9% in the West, but dropped 37.3% in the Midwest.
A copy of the full report is available at: http://www.census.gov/construction/nrs.

Write to Sarah Portlock at sarah.portlock@dowjones.com and Eric Morath at eric.morath@dowjones.com.
-
(END) Dow Jones Newswires
October 24, 2012 10:00 ET (14:00 GMT)
Copyright (c) 2012 Dow Jones & Company, Inc.- - 10 00 AM EDT 10-24-12


Let's go to Las Vegas..... Or Macau!
Watch this one:

gh

Happy Anniversary!

The talking heads are reminding the traders that today is the 25th anniversary of "Black Monday". That was the day in 1987 that the Dow sold off 20% in one day. 

There were some poor earnings out. Google's little mishap caused a large part of yesterdays weakness and it carried over to today. CMG was weak on poor earning also, I think I heard them say. I haven't followed the Chipotle story. I have never seen a Chipotle where I live. When they said today that they were a competitor of Taco Bell it made me wonder why a fast food taco joint could be held to such high value... Looking at the chart now it looks like it had quadrupled over the last couple years.. DOH!

Todays selloff is the biggest in a few weeks. Unless we get a late day rally. I am always suspect of any move that happens on an anniversary that is widely publicized. I think it will be more of the rotation out of tech and retail and into gas, metals, and real estate. Real stuff. But time will tell, of course.

A couple things have caught my eye.

One is the difference between Silver Wheaton and SLV the silver ETF... I have for quite some time considered SLW to be the "adult" in the room where silver speculation was considered.

Another thing: TBT, the short bond fund was revalued on Oct. 5. They did a reverse stock split. 4/1. The price went from $15 to $60... The volume went up however. At least looking at the chart it shows that there are more shares trading than before. To take that at face value I would consider that there is a lot more big money interested in shorting long bonds than in buying them. When comparing TLT to TBT..  And TLT looks like it is finding support on the old ceiling. It may turn up, but it looks weak to me so far. Look out if it falls through the ceiling!  We'll see.

The charts:

If anyone has info on the TBT volume thing let me know..

gh

Another reason to be optimistic?

A couple posts back I noted that I feel better about the markets and the economy in general when I start seeing bullish patterns forming in a variety of stocks and markets. (Unless it is the long bond market! LOL)
Here is a sign of a possible bottom in Cliffs Natural Resources. They mine iron.

http://www.cliffsnaturalresources.com/EN/Pages/default.aspx

When this stock gets hot it gets hot. But right now I still feel it needs to make another small top here. Then, IF it goes higher it has a good chance of a sustained trend.

But it is seeing things like this that give me an indication of the general strength of the world economy. There is some accumulation going on in this stock or lots of shorts covering. I don't know. I don't really care. I trade the price and the volume. It is probably a combination of those reasons.

Control risk.
gh

Index update.

An update on the progress of the smallcap index. Although the smallcaps have lagged the larger caps lately, they still are closer to all time highs on a longer term.

The chart still looks good. I won't be surprised to hear more talk of "triple tops" by the MSM.

For the long term investor it would be wise to be long if these markets get to alltime highs. There are no guarantees tho, there are many headwinds blowing. Timing is important. As is money management/positions size management.

gh

What this election is about.

I've been reading Polyani's "The Great Transformation" lately. Thanks to Jesse at the Cafe Americain'.

I sent a submission to the local paper today.

Here is the text:

Which path do we choose?



There is a national election coming up. You may have heard. The debate over the next president is a debate over the state of the economy. We heard years ago the phrase, "it's the economy, stupid!" And then the idea that people "vote their pocketbooks". As I review history I am struck by the fact that these debates we are having today are the same debates people have been having for centuries.
In the 17th century at the start of this thing we call capitalism the control of the economy rested with the kings and squires that controlled their own small pieces of the world. Merchants were beholden to the royalty as much as the peasants. With the passage of time the power of the merchants rose, and their whispering into the ears of the rulers had some influence. Often good influence as it was not in the interest of exporters to have major wars ruin their businesses. In those years the wars tended to be smaller. But the control of the the social situation resided with the royalty and those commissions that made the laws. Capitalism and economic theories were new then and were referred to as liberal ideas. The power of the churches was still strong and they were charged with administering the social welfare. They took care of the poor. The rich contributed to the churches not only to save their souls but to prevent a revolution by the hungry peasants.

The ideas of a free market gained traction in the industrial revolution and gradually the ideas of "laizzez faire" gained traction. However as this occurred there came a large increase in the number of the starving and destitute. A backlash in the late years of the 18th century coincided with the American and the French revolutions. These were rebellions caused by economic conditions. The debt of a speculative bubble in the middle 1700's was the major factor in the public unrest that led people to take up arms for liberty and equality.

The pedulum kept swinging as people and generations forgot the lessons of their parents. Laizzez faire gained traction again. After the Civil war in the U.S. there was a period of rapid industrial expansion. This period was characterized by a cycle of booms and busts. Particulary in the stock markets. The banking panic of 1907 was particulary severe. There came more political revolution in the early 20th century. This resulted in the spread of Communism as people searched for shelter from the harsh effects of capitalism unleashed. The result was the totalitarianism of Russia and then later China. In this country the move was toward a socialism that combined the good of the capitalist system with the safety nets of socialism. A balanced solution that worked magnificently for 60 years. And then we forgot lessons learned again. The Reagan revolution happened and the pendulum swung to the side of capitalism again. Over the next 30 years the share of wealth flowed to the rich. The wage earners lost purchasing power and went into debt. The number of the poor increased as the gap between rich and poor widened.

So here we are again. We are voting for a president in whom we hope will be a deciding influence on the type of society that we have. On the one hand we have a pure capitalist. A man who spent his professional life taking advantage of the power of money. On the other side we have a man who made a career out of helping the disadvantaged to organize in order to obtain greater political power. The man elected president will have thousands of decisions to make over the next four years. How he votes on any one issue or question wil be dependent on the conditions at the time the decision needs to be made. Neither can make any hard promises nor should we expect any. The decision we as voters need to make is about the charactor of the man who is president. What direction will he tend to take us. I advocate for revolution at the ballot box and a revolution in the hearts of the people of this country. I advocate for a departure from the path of believing in the all knowing and all powerful market. A true revolution would be to re-elect a president who's instinct is for the common man. I will vote for progress. It is where history shows we will go anyway, even if we have to make all the wrong choices first!

Thank you,
gh

Blackberry?

Research in Motion is the makers of the Blackberry device. I don't know anything about them except that they have had a hard time competing against the other devices out there.

The chart of the stock is pointing to a possible trading opportunity however.

Another of those "triple tops" perhaps....

Keep in mind that the profitability of any single stock is heavily dependent on what is going on in the broader market. This is a very important point. If the stock market as a whole is strong a breakout through previous highs will often be thought a buying opportunity. However if the general market is weak those same prices will be a selling opportunity as market participants reduce risk.
This is why it is important to pay attention to big picture items and market averages.

Control risk,
gh

Another nice pattern

The chart say it:

gh

Technically speaking....

Here is an example of a technical chart pattern. I have found these to be high probability profitable over the years. Particularly in the Chinese stocks.

The timing is the trick. Too early and they are not highly probabilistic.  Too late and you miss a good entry point.

Usually it is a mistake to take a position when a market is in a trading range if expecting a trend play.
However, with close observation the timing can be refined. I noticed in this pattern that there were a couple of days when the price traded below the price of a couple days previously and then recovered to the top of the range. ie, there was no panic about the price going down. If anybody sold just because the price was below a previous low, they were in small numbers, and others were buying those "low" prices.

The Chinese stocks often gap out of these ranges so I try to get at least a small position early....

This one is good so far. The Chinese market does seem to be bottoming.....

We'll see,
Control risk.
gh

Another train leaving the station

I ran across this and liked it so well I copied the link!

http://www.dailykos.com/story/2012/08/16/1118640/-Dear-Conservatives-The-train-is-leaving-the-station-You-can-hop-on-or-stay-cursing-at-the-platform

Eureka!

I spend a lot of time watching markets trade. Paying attention to the sectors that are strong and those that are weak. Price and volume tell the urgency of the price direction. And taking that information in the context of recent market action, recent news, and the general discourse on CNBC and Bloomberg, as well as developments politically around the world becomes a puzzle that I seem addicted to. I am constantly trying to explain the market tone, assuming that by the time I hear the news it is baked into the market.

There has been much breathless reporting lately on the "fiscal cliff" that is approaching and how deleterious that will be for the markets and for the economy. If indeed it was anything as serious as the talking heads claim I would expect us to be in a fullfledged bear market by now.

But we aren't. The recent two week decline in the averages has been lackluster. I don't see any urgency in the selling. I notice strength in the iron ore/steel areas. I notice weakness in the long bonds. There is strength in natural gas. Continued strength in grains, cattle, hogs. Some weakness in the Nasdaq (QQQ) that I attribute to the AAPL weakness resulting from their first stumble in the mapping area. And of course the recent gold and silver strength...

Put simply, a rotation out of tech and into hard assets. Inflationary assets. Out of long bonds.

So it doesn't make sense. The fiscal cliff is a DEFLATIONARY event. A political response to paper over the cliff would be inflationary. But I don't hear much talk of fixing the fiscal situation before the presidential elections, nor would I expect to hear such.

And then I had a "Eureka!" moment..

If the Eurozone decides to move further toward issuance of a Eurobond that would explain the recent tone of the markets.
Suppose a Eurobond comes into existence. Or even is planned officially to come into existence. That will be inflationary for Europe. (This is why Germany opposes it) The sale of Eurobonds would provide a huge source of credit and liquidity for Europe. The Euro as a currency would move out from under the cloud of uncertainty it is under. It's status as a world currency would be refreshed. And for years countries around the world have lamented the lack of another world currency suitable for diversification away from the U.S. dollar. A move into the Euro by lending to the Eurozone (buying THEIR bonds) would result in a decline in the U.S. dollar as well as a decline in the U.S. Treasury bonds. This could cause the rush out of the long US treasurys that I have felt is inevitable. This money would find it's way to the stock markets and bond markets of Europe, our exporters would look better due to a strong Eurozone's purchasing power and a weak dollar. And at some point the U.S. investing public would have to give up the "safety" of their bond funds and go back to stocks, or something.....
Of course at some point the U.S. Federal Reserve and U.S. Treasury would have to defend the dollar. But their recent stance would take time to reverse...

After this idea struck I started looking around the internet and came upon something from the U.K. Parliament. The excerpt is below. I was particulary struck by the reference to a "professor Begg" who is a professor at the London School of Economics. (Look at their site) He stated that the Eurobond is almost certain to come about....
To read the full page follow the link.

http://www.publications.parliament.uk/pa/ld201012/ldselect/ldeucom/260/26007.htm
l
CHAPTER 4: OTHER POLICY RESPONSES
An expanded role for the ECB 54. Member States that enter the European Monetary Union relinquish the capacity to issue debt in a currency they control and the ability to supply liquidity in times of financial distress through their national central banks. The existence of the European Central Bank (ECB) prevents national policymakers from using monetary policy in times of strain on public finances. Outside the monetary union (as in the UK), national central banks have the ability to provide liquidity to banks and governments.
55. The ECB does not consider financial stability as part of its core mandate. As its then President, Jean-Claude Trichet, put it in a press conference in August 2011, the ECB has "only one needle on [its] compass", namely control of inflation.[49
] Frequent reference has been made by the ECB to Article 123 TFEU, which prohibits the direct purchase of debt from euro area states.[50] 56. The ECB's reluctance to take on a more interventionist role prompted EU leaders to come up with alternatives. As we have seen, they created the European Financial Stability Facility (EFSF) and the smaller European Financial Stability Mechanism (EFSM) as temporary mechanisms, with a permanent European Stabilisation Mechanism (ESM) now to come into effect in July 2012.
57. Despite these limitations, the ECB has for some months been purchasing from the secondary market government bonds of those euro area countries in financial distress, while making it clear that it sees such a role as limited, temporary and aimed at ensuring functioning markets.
58. On 30 November 2011, the ECB took part in the announcement of co-ordinated actions with the US Federal Reserve, the Bank of Canada, the Bank of England, the Bank of Japan and the Swiss National Bank, to enhance central banks' capacity to provide liquidity support to the global financial system, aiming to ease strains in financial markets and thereby to mitigate the effects on the supply of credit to households and business and so help foster economic activity.[51
] 59. Then, in December 2011, the ECB announced a set of "additional enhanced credit support measures to support bank lending and liquidity in the euro area money market", including unlimited loans lasting three years to euro area banks. ECB President Mario Draghi stated that "these measures should ensure enhanced access of the banking sector to liquidity and facilitate the functioning of the euro area money market. They are expected to support the provision of credit to households and non-financial corporations."[52
] This 'Long Term Refinancing Operation' (LTRO) provided 500 European banks with a total of €489 billion in three-year loans at very low interest rates.[53] A second round is to follow at the end of February 2012: on 30 January it was reported that take-up for this operation might be twice as high as for the one in December.[54] The aim was to provide liquidity to the banking sector, thereby increasing the banks' ability and willingness to resume lending to the private sector and euro area states. 60. The escalation of the euro area crisis has led to intensified calls for the ECB to take more decisive action in the sovereign bond markets, notably through the widespread purchase of new sovereign bonds.
61. We discussed the role of the ECB with our witnesses. Sharon Bowles pointed out that the ECB was the only institution that had the ability to respond swiftly to the markets, and stressed that it had been more "market savvy" and had more foresight than other key players. In her view, the ECB had already by its actions "saved the euro".[55
] Professor Buiter made the point that "central banks are lucky institutions: they do not need equity"; that is, the ECB is not subject to capital requirements and its capacity to absorb losses is infinite if constraints on inflation are not considered.[56] 62. The fear of inflationary pressure is, in fact, a common argument against the ECB taking a more active role. This is in part a reflection of German fear of hyperinflation in light of the experience of the Weimar Republic during the 1920s. The reluctance of German leaders to countenance an enhanced role for the ECB was apparent in the evidence provided to us by the German Ambassador, who stated that "you have to keep in mind that the instruments of the Eurosystem are not designed and not intended to solve the structural problems of some [euro area] Member States. By buying certain government bonds the Eurosystem gave the [euro area] Member States enough time to address the problems where they should be addressed: at the fiscal level."[57
] Mr Amato also sounded a note of caution, arguing that the ECB could not act in the same ways as the Federal Reserve in the United States, because "you cannot be the federal reserve without a federal state".[58] 63. Welcome and necessary as they have been, a note of caution should be sounded regarding the steps taken by the ECB. It has been argued that there is little evidence as yet that the ECB's lending is encouraging banks to inject much-needed credit into the economy. Furthermore, there is nervousness that such large-scale lending could spread the disease of over-indebtedness to the ECB itself, thus "undermining the global economy's last bastion of strength", and further prolong the distortion of normally functioning markets.[59
] 64. The ECB has already taken unprecedented steps in relation to the euro area crisis through the purchase of sovereign bonds in the secondary debt markets, and more recently through a massive operation to refinance European banks. There has been pressure for the ECB to play an even greater role, which the ECB has thus far resisted, in particular citing the need to respect the Treaty provisions that bar the direct monetary financing of governments. In our view, although the ECB should not be regarded as a panacea, additional ECB intervention is likely to prove essential, at least to preserve the functioning of credit markets and thus to support economic growth, if progress is to be made in resolving the euro area crisis.
'Eurobonds' 65. We explored the idea of 'eurobonds'—bonds which are in some way mutually guaranteed by all of the euro area Member States—in our previous report.[60
] Since then there have been increased calls for their adoption as a means of calming the markets by providing liquidity to the euro area. 66. Professor Begg argued that the proposal for a 'eurobond' was attractive in the eyes of many because, by mutualising the debt, "you would have a highly rated bond ... on a par with a US Treasury bond, with a coupon that is much lower, on average. It will not be the average of the German and Italian rates; it will be very close to the German rate." He referred to the case of the United States where, despite their poor deficit and debt figures, which are higher than those for the euro area as a whole, the market was still liquid even after their credit rating was downgraded. He asserted that the Chinese would welcome European bonds as an alternative to investing in Treasury bonds in the US, and argued that other major creditors, such as the Gulf States, would see a 'eurobond' as a safe haven, especially with a strong commitment on inflation. In his view, "fully fledged eurobonds ... will almost certainly come."[61
] 67. Germany has been highly reluctant to countenance 'eurobonds'. Ambassador Boomgaarden argued that they "are not a solution for the existing crisis. If there is any debate about eurobonds, this is not the time to have it. This is something that could be the crown of an existing full fiscal union, but it would have very great moral hazard in an incomplete monetary union."[62
] Mr Amato stated that, even with the fiscal compact treaty in place, it was unrealistic to expect that Germany would accept fully fledged 'eurobonds'; and that attention should be focused on mutually guaranteed 'project bonds' for specific pan-EU projects such as the development of a European power grid.[63] 　
70. It remains to be seen whether a 'eurobond' could be designed in such a way as to meet the concerns of nations such as Germany, so that it will not lead to a risk of moral hazard nor lower the cost of servicing the public debt for some countries in the euro area at the expense of a considerable increase for others. The Commission's proposals are at an early stage of development, and, though 'eurobonds' could relieve pressure in the bond market, they are only likely to become a mechanism available for use in the medium to long term. The lack of reference to 'eurobonds' in the 9 December statement might be taken to suggest that their introduction remains a distant prospect. Yet the question of whether they are a necessary step towards solving the euro area crisis needs to be addressed.
　Time will tell of course....
gh

Markets drift lower

Recent declines in the stock markets have been met with breathless coverage by the talking heads. My take on the volume and price moves is a decline without urgency. Of course at some point there will be a flurry of activity as the weak hands throw in the towel. Then the real test will begin.

But many are calling the recent tops in the stock and precious metals markets and the energy markets the start of a precipitous decline.  My experience with major market tops is that they take a long time to form and are characterized by a sideways trend with above average volume, particularly on the declines.  I haven't seen that so far in the last couple of weeks. I see declines below the previous day on lower volume than the previous days. The markets usually press this pattern until they get some selling volume, then those waiting for that volume will buy.
And then the process may repeat for two or three cycles before there is a definitive top or a continuation of the trend.
Given that much talk is of the coming "fiscal cliff" the lack of volume is unwarranted if there is to be a precipitous and sustained decline.
I feel that we are on the verge of a sustained decline in the U.S. dollar with the inflation of assets inherent in that.

But we may have to do a gut check in silver. These markets nearly always go for the easy money. And there are probably a lot of traders who will sell below the recent low... So other traders will shoot for those orders....
SLV:

Meanwhile Chesapeake keeps pushing against the ceiling... Recent continued gains in UNG/natgas prices will push these producers up....  CHK,  APA, GASL, APC

Chesapeake:

control risk, (don't let your losses get big)
gh

U.S. National Debt: Who gets the blame?

I get so tired of all this talk of the tax and spend Democrats. The facts of the matter are that Democrats have been more fiscally conservative than the Repubs.
It was in the Ronald Reagan era that the national debt took off to the upside. And the private debt did the same. Asset prices did the same. You can substitute the phrase "asset prices" with " inflation". It is the same.
Everything went up except for the U.S. dollar and the savings of the U.S. citizens.
And starting there in that period of time began the practice of government bailouts of failing banks. And it is so because precisely at the time of the onset of "laizzez faire" economics, the volatility of the financial sphere and the economy began.
At that time the public was sold on the idea of tax cuts. They were never sold on the idea of safety net cuts. That doesn't sell so good. And with good reason. People know that they need the retirement and medical help from the large entitlement programs. The debt creation and the inflation has removed all possibility of actually saving for retirement. In a system that depends on inflation to have growth it is a necessity for the present day taxes to pay for the present day safety nets. There is no way to "set aside" money when inflation is constant.
Add to that the war on labor. Constant loss of real purchasing power made a private debt binge all but inevitable.

Give that some thought.

A link:
http://zfacts.com/p/318.html

A chart:

gh

Weakened currencies

And here is an article from the Economist regarding the worldwide move by governments to weaken their own currencies. An about face from an earlier time....

http://www.economist.com/node/21564210

enjoy

nat gas news

DJ U.S. GAS: Futures Surge Back into Positive Territory

--Natural-gas rebounds as volume jumps in midday trading
--Gas futures recently up 3.4c to $3.437
--Some see drop in storage surplus ahead

By Jerry A. DiColo

NEW YORK--Natural gas futures rebounded from early losses Tuesday in a swift midday reversal, as investors resumed bullish bets after a brief pullback in prices.
Natural gas for November delivery was recently up 3.4 cents, or 1%, at $3.437 a million British thermal units on the New York Mercantile Exchange after falling as low as $3.346/MMBtu earlier in the session.
The bounce came just before 12:30 p.m. EDT when a surge in trading volume lifted gas prices from $3.36/MMBtu to above $3.40/MMBtu in just a few minutes. Volume shot above 1,000 contracts per minute as prices rose after holding near 100 contracts for most of session's earlier trading.
"You're finding a scenario where people will buy the dips," said Bob Yawger, director of energy futures at Mizuho.
Warmer-than-normal temperatures are expected across much of the Midwest and East Coast over the next two weeks, according to the reports of private forecasters, which initially sent prices lower Tuesday.
Warm weather this time of year typically keeps demand for natural gas low. Gas is used to heat more than half of U.S. homes, and many others use electric heat from gas-fired utilities. Moderate temperatures mean homes and businesses don't need to crank up their heaters.
But after a cool spell that kept temperatures below normal in recent days, some investors may be anticipating a lower-than-normal storage injection in Thursday's data, said Mr. Yawger.
U.S. storage inventories stand at 8.3% above the five-year average for this time of year, well below gas-storage levels that ended March roughly 60% above the five-year average for that time of year.

Subscribe to WSJ: http://online.wsj.com?mod=djnwires

(END) Dow Jones Newswires
October 09, 2012 13:44 ET (17:44 GMT)
Copyright (c) 2012 Dow Jones & Company, Inc.- - 01 44 PM EDT 10-09-12


Pay note to the trend in nat gas supplies/stocks.......

Volatile weather due to climate change?  Hotter hots and colder colds...?

APC   APA  GASL  UNG  

Is the train leaving the station?

Control your position and control your risk....
gh

Coffee?

I've noticed some interesting action in a coffee ETF that goes by the ticker JO. The first thing I noticed were the declines on low volume. Whenever I try to pick a bottom that is the first thing that I look for. To me it means that the selling is being done by habit, and that the urgency to sell is no longer there. It is usually after other bottom pickers have given up after a long decline. The lack of volume also has a tendency to make any big shorts nervous. They need volume to get out of their positions and a short covering rally can be sharp and vicious. (From a short's perspective)

The second thing I look for in a potential bottom is increased volume on the rallies. This may just be short covering, but coming after the declines in volume I would consider short covering the first part of a longer term rally.

For whatever reasons this chart of JO looks promising. It may be part of a coming inflationary trend.

The chart:

As always, put on a position slowly and on signs of continued strength. (To control risk)

UNG looking good. There will most likely be some consolidation or pullback from the $22.40 area here. But the next breakout MAY be after that. I would add some more after a rally above any consolidation of two weeks or more here...... Control risk. again.

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