Commodity Chart Of The Day: Natural Gas

Jun.14.12 | About: iPath DJ-UBS (GAZ)

Commodity Chart of the Day

Daily Natural Gas

Click to enlarge image.Click to enlarge

This is a serious move, and I cannot remember the last time I saw a commodity move 15% in just one day -- but that is what natural gas did today. Prices have been beaten down in recent months, but, silly me, I thought the April lows would be challenged so I failed to get clients in this move. As you can see in the chart above, the white trendline at the bottom prices got close, but on the AGA report today it is evident of severe short covering.

Not only did we experience a giant move, but also a volume spike. So I'm going to say an interim low is in for the summer, and this is now a buy-the-dips market. A potential play would be ratio spreads a few months out, or gaining bullish exposure in futures while simultaneously selling out-of-the-money calls.

Either way you slice it, I think we could experience a grind higher in the preceding months. So gain long exposure on dips is my suggestion.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

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