ENERGY ALERT - ENERGY ALERT - October 25, 2013
Near-Term Buy Signals for Natural Gas and Electricity
by Ray Franklin, Senior Energy Analyst, Consumer Energy Solutions, Inc.
The purpose of this Energy Alert is twofold:
- Notify our clients of a near-term buy signal for Natural Gas and Electricity, which are highly correlated to each other.
- Evidence for higher prices longer-term from a technical and seasonal perspective.
1) Near-term buying signal for Natural Gas and Electricity
Over years of trading commodities I have learned the way a market reacts to news is more important than the news itself. If a market does not decline with bearish news it is signaling the next move is likely to the upside. To appreciate why this happens you need to understand how large hedges are built during a bull market.
The characteristic of a long-term bull market is that it forms a pattern of higher highs and higher lows. The reason for this is large hedgers build their positions in stages. They do not chase the market; they patiently wait for pullbacks and enter their positions on bearish news. The only way to build a large buy position is to have a large number of sellers willing to take the other side of the trade. A bearish report offers large hedgers the ideal opportunity to build their positions. In the chart below you can see 3 recent buying signals, which were all triggered after bearish Natural Gas Storage Reports.
September 16, 2013 - Natural Gas and Electricity Resuming Long-term Trend Higher
In our last Energy Alert we predicted Natural Gas would remain below its long-term trend line for a short period of time and considered an opportunity to initiate or extend hedges. As you can see from the chart below Natural Gas closed above the 200-Day Moving Average today...READ FULL ARTICLE
July 26, 2013 - Natural Gas Consolidating near the 200-Day Moving Average
In our 6/21/13 Energy Alert, we stated natural gas was nearing completion of the pullback we predicted as it declined to the 200-Day Moving Average. We explained the 200-Day Moving Average is the long-term indicator of trend, and based on long-term cyclical patterns the 10-year low reached in the spring of 2012 was likely the end of a four-year bear market, and we are now in the early stages of a bull market similar to the bull market of 2002 to 2008. During bull markets long-term trend followers utilize pullbacks towards the 200-day moving average as hedging opportunities... READ FULL ARTICLE
May 10, 2013 - How to Respond to Near-Term Correction in Natural Gas Price
In our last alert on 4/6/13, we stated that in the next 30-45 days a window of opportunity might present itself in which our clients could capitalize on a short-term pullback. We also stated that it would be important to take advantage of this buying opportunity because we believe energy supply rates are poised to go much higher in the second half of 2013... READ FULL ARTICLE
April 6, 2013 - Near-Term Hedging Opportunity in April/May
The following update is short, but if you have not hedged your Natural Gas or Electricity it is vital that you read this and understand its implications to your business... READ FULL ARTICLE
April 4, 2013 - Concerns Point To Higher Natural Gas and Electricity Rates in 2013
We are recommending all Commercial/Industrial customers currently under contract through 1st quarter 2014 lock in electricity and natural gas hedges in the next 30-60 days. This report will outline several reasons why we feel Natural Gas and Electricity prices will continue to increase moving into 2013... READ FULL ARTICLE
July 15, 2012 - Natural Gas Continues Rally into Summer
After reaching a historic 10 year low price on April 19th of $1.90, natural gas rallied over 45% in the past 2 months to close at $2.78 on July 6th. This is having an IMMEDIATE impact on both electricity and natural gas rates available for commercial and residential customers... READ FULL ARTICLE
May 8, 2012 - Natural Gas and Electricity Prices at Record Low Levels
Natural Gas and Electricity prices have recently hit unprecedented 10 year low levels not seen since prior to Hurricane Katrina. Current price levels are even slightly lower than the lows reached in the Fall of 2009, subsequent to the economic meltdown. This has transpired in large part due to the following reasons... READ FULL ARTICLE
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