Tantamount to a "I Told You So", The Natural Gas Bubble Is Still Popping "Look Out Below!"
The natural gas bubble has started popping and the beginnings of this pop should send shivers down any natural gas traders back. The recent drop is set to continue further as regardless of this weeks EIA report, the injections coming are currently set up for four weeks of 100+ injections. This coupled with the EIA recent reporting that this years total injections will be 1% greater than last year's will most likely cause the gas markets to plummet and we calculate a 25% chance of seeing sub-$3 dollars over the next 45 days. Other charts calcs show a 53% chance of prices being between $3.00 and $3.40, while there is a 75% percent chance that we hit below $3.65 in the next two-three weeks.
Massive exodus of the natural gas sector is being caused by the excessive speculators creating all the hallmarks of the bubble and with record injections now coming, they are being yanked the other direction with self-inflictions and vividly this market is on toothpicks holding up a concrete foundation. The weight of the situation will take hold and the coming weeks sell-offs could be massive. It wouldn't be surprising if we see a $0.50 single day sell-off on bearish news. More news to come…
Disclosure: I am short UNG.
Additional disclosure: short natural gas