From the Desk of Ian Culley @IanCulley
Our cotton and sugar trades are working. Coffee is raring to go.
And crude oil is pushing toward a solid first-half finish.
Beyond that, commodities are dribbling lower.
Let’s review an energy contract that broke out two months ago and has never looked back—Natty Gas!
Natural gas futures are carving out an eighteen-month base below last year’s high:
I outlined our bullish outlook in late April. Natty Gas ripped the following week, rallying more than a dollar in just six weeks.
Now, price is consolidating within a twenty-percent range (potential right shoulder):
An upside resolution above the June highs offers another opportunity to buy natural gas. I like adding to current long positions on a break above the daily closing high of 3.159.
But overhead supply exists at approximately 3.50.
I’d prefer Natty Gas turn toward two bucks before breaking to new highs. At least then it would challenge our initial entry point.
I’m always prepared for sellers to drive price back to the breakout level. It’s the norm, not the exception.
On the other hand, the best trades never hesitate following a decisive breakout – no retest necessary.
Buying natural gas futures above 2.15 or 3.16 could be such trades.
I welcome an easy entry for natural gas futures.
But I won’t count on it.
–Ian
COT Heatmap Highlights
- Commercials posted their largest net-long position for soybean oil in history.
- Commercial net-short positioning for silver falls within five percent of a new three-year extreme.
- Commercial hedgers carry their largest long position for the Japanese yen in three years, bordering its historical record.
Click here to download the All Star Charts COT Heatmap.
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