First half of January: looking to be Long NatGas

Tue Dec23 (NY) - by Anatoly Veltman - Chief Global Analyst - 1. This commodity rallied in first half of Jan in 2000, 2001, 2003, 2004, 2005, 2007 and 2008. (The exception year 2002 was digesting Enron manipulations, and did rally only by the end of January. The exception year of 2006 was just continuation of collapse from all-time high print of 250% price bubble of 2005.) 2. Price has just completed 100.0% Lobagola from $5.20->$13.70 and back to $5.21. 3. Both Open Interest and Commitment of Traders data have displayed non-Bearish profile during recent months' non-stop price decline: O.I. has been contracting, indicating that substantial part of Long-liquidation is already out-of-the-way; C.O.T. shows Commercials at record Net Long commitment, while Funds at record Net Short commitment. 4. There may well arise speculative commitment to Long nearing Obama's inaugural; logic has it that his policies will prioritize conversion to cleaner-burning NG significantly more than Bush's. 5. The pattern of large expiration gap in Crude, as I recall over the years: the new contract hardly ever follows to close the expiry gap entirely. This may be counter-intuitive to most, who look for Feb Crude to not just keep sliding to the tune of at least the entire $8.50 premium that it sported when Jan expired; but more indeed, all the way to $25. Historical patterns do not support such speculation. 6. We are liking the little fact that NG deflated exactly 2.62 times from this year's $13.69 top; i.e. this year's new $5.21 low is exactly 38% of that top price! . . . (to read the remainder of this article, please log in below.)