Here is a valid plan for anyone who is bullish on Natural Gas. It is over bought now, but a pullback to 3.90 or 3.80 (38% and 50% Fibs) prior to achieving target could be doable.
The question I have is whether the countdown is days, weeks or months. If it tops out in days or weeks I’d expect a topping process that could take the majority or all of 2014. If it accelerates for the next few months to what looks like a parabolic (silver-like) blow off, then the top could take the form of a sharp reversal. Either way risk vs. reward is no good on the US market. I write this as someone still playing this thing, but with eyes open.
Guest Post by Michael Ashton
There was a great deal of excitement about today’s Employment Report. The S&P rallied 1.1%, erasing the month-to-date losses at a stroke. And for what? Nonfarm Payrolls were reported at 203k with a net +8k upward revision to the prior months, versus expectations for 185k. That’s a miss that is easily within the standard error. The 6-month average stayed at about 180k and the 12-month average at about 190k. The 3-month average reached 193k, but that is lower than it was in Q1 of this year so no great shakes there.
Guest Post by Doug Noland
With about three weeks to go until year-end, things are turning more interesting.
December 6 – Bloomberg (Saijel Kishan and Kelly Bit): “The $2.5 trillion hedge-fund industry, whose money managers are among the finance world’s highest paid, is headed for its worst annual performance relative to U.S. stocks since at least 2005. The funds returned 7.1% in 2013 through November… That’s 22 percentage points less than the 29.1% return of the Standard & Poor’s 500 Index, with reinvested dividends, as markets rallied to records. ‘It has been difficult for hedge funds on the short side,’ said Nick Markola, head of research at Fieldpoint Private, a $3.5 billion… private bank and wealth-advisory firm… Hedge funds, which stand to earn about $50 billion in management fees this year based on industrywide assets, are underperforming the benchmark U.S. index for the fifth year in a row … Billionaire Stan Druckenmiller, who produced annual returns averaging 30% for more than two decades, last month called the industry’s results a ‘tragedy’ and questioned why investors pay hedge-fund fees for annual gains closer to 8%.”
For anyone interested, the CoT data improved again, although silver is not yet near the level that put in the June bottom. This could best be termed a sentiment indicator I guess. Other sentiment indicators are contrarian bullish. Yet certain macro fundamentals are not. I would welcome a final event to clear the contradictions, croak the bottom callers and finally set things up for a rally or bull market.
Everybody’s afraid of the dreaded ‘taper’ and that may be just what is needed to get the inflationists out of the gold market (come on FOMC, don’t roll over on us again). They are absolutely obsessed with the money printing aspect of QE and yet not looking at yield relationships and ZIRP.