Seeking Alpha

Robert Edwards'  Instablog

Robert Edwards
Send Message
Contrarian daytrading technician who specializes in locating high probability short term trades while predicting price movement directions with over 85% accuracy. Most of my trading involves either extremely short term micro scalping of stocks or commodities (using 1 minute bar charts), or swing... More
View Robert Edwards' Instablogs on:
  • Natural Gas Is About To Trigger A Major Long Term Buy Signal

    Natural Gas Is About To Take Out A Down-sloping Trendline

    In doing my research I came across this article by David Becker at FXEMPIRE, click here. What is amazing to see was the weekly chart going back 4 years. I will repeat the chart here:

    On the above weekly natural gas chart is drawn a downward sloping trendline starting from the February 2014 high of $6.483, retouched 9 months later at just above $4.50 in November 2014 and now about to be broken sometime in July. Counting out another 9 months from late November 2014, one could project another high in late August 2015.

    If we can rally in natural gas back above $3, we could easily pop back towards $4 or higher, based on the Fibonacci retracement levels mentioned in the article. However, we will break the downward sloping trendline if we can just maintain the mid $2.80s in the next couple weeks.

    Being Bullish On Natural Gas Is The Contrarian View

    Check out this video by Christopher Lewis at FXEMPIRE, click here. He is very bearish and telling traders to sell all rallies. I would agree with him somewhat as long as we do not trade above the $3.00 to $3.17 resistance levels. However, if we start moving above $3.25, a major low could be in and much, much higher prices are in store. I have been buying natural gas dips through futures as well as buying UGAZ, but turning to shorting futures or buying DGAZ as we approach resistance in the $2.85 level and higher prices. That has worked out well so far. However, that could soon change and one needs to be cautious shorting into a hole.

    Higher Natural Gas Prices Are Now In The Forecast

    At www.forecasts.org, click here, they are looking for just marginally higher natural gas prices through the summer but a larger rally in October and November of this year as we approach winter. In any case, one needs to favor owning the triple leveraged bullish natural gas ETN (NYSEARCA:UGAZ) over the bearish triple leveraged natural gas TN (NYSEARCA:DGAZ), in my opinion. Especially one needs to be careful about being short if we again move back above $3.00.

    Summary

    Sometimes it is nice to step back and get a look at the big picture. I cannot emphasize enough the importance for natural gas bulls, of breaking that downward sloping trendline. The bullish ramifications could be immense. This could be the last time natural gas trades at current prices for several years, perhaps in our lifetimes. We could be looking at a generational buy in natural gas right now. With the advent of exporting liquid natural gas (NYSEMKT:LNG) later this year, domestic natural gas prices should gradually increase closer to the much higher international natural gas prices. Here is a chart showing world natural gas prices posted by Mark J. Perry, a year ago, click here. Other countries are lucky to pay double the prices we pay for natural gas. A majority of countries pay 3 1/2 to 4 times our prices. As we go forward $4 will be considered a bargain low natural gas price, with $3 a back up the truck and buy, bottom!

    To follow along as we trade gold and other commodities, join us in our private Short Bull Trading Room on WeChat. Just download the free app on your phone or tablet, and then add "bobed1". You can then send me a message so I can invite you into the room. Still plenty of room.

    You can also subscribe to my free weekly newsletter. Send an email to shortbull2020@yahoo.com if interested in subscribing. Again, it is free!

    Disclaimer:

    The thoughts and opinions in this article, along with all STOCKTALK posts made by Robert Edwards, are my own. I am merely giving my interpretation of market moves as I see them. I am sharing what I am doing in my own trading. Sometimes I am correct, while other times I am wrong. They are not trading recommendations, but just another opinion that one may consider as one does their own due diligence.

    Jul 04 6:13 AM | Link | Comment!
  • Stay Away From The Beaten Down Coal Names, But Look To Coal Terminal Owners Instead

    I did some research on coal companies and decided that even though many were just going for small fractions of their book values, the sector is showing no signs of bottoming and are too risky to own. Making money with coal stocks right now, even the big names, is not as bad of odds as one would face trying to get rich from buying lottery tickets. But it might be pretty close.

    However, in my search I did run across one article that pointed out a couple companies that showed some promise. Aaron Levitt suggested owning coal terminal owners instead of the coal names themselves, click here. He recommended Kinder Morgan (NYSE:KMI) and CONSOL Energy (NYSE:CNX).

    Kinder Morgan, Inc.

    (click to enlarge)

    The above weekly chart shows Kinder Morgan is trading near an excellent support level of $38. It could briefly spike down to the low $36s like it did last December, but all dips look to be a buy. The stock offers a nice dividend and also has appreciation potential.

    CONSOL Energy, Inc.

    (click to enlarge)

    By owning its own export terminal at Baltimore Marine, CNX does not need to pay terminal fees to another company. Other coal companies are paying them. Also David Einhorn is getting involved, click here. I love to trade stocks where David Einhorn is involved as they tend to be quite volatile. Looking at the above chart, it is apparent that CNX is washed out at $22. Previously the stock bounced $10 from $32 to $42 last fall. Early this year CNX saw a 3 week bounce from $28 to $34, followed by a 3 week selloff to $26. Then it took 8 weeks to get to $34. The past 7 weeks have been straight down. It could keep falling so don't jump in immediately on Monday morning but watch this stock for stability. It should find some soon. Getting David Einhorn's endorsement won't hurt. This stock interests me because it is a real mover, both to the upside and especially to the downside recently. Again, this is definitely one to watch!

    To follow along as we trade gold and other commodities, join us in our private Short Bull Trading Room on WeChat. Just download the free app on your phone or tablet, and then add "bobed1". You can then send me a message so I can invite you into the room. Still plenty of room.

    Today I sent out my fourth issue of my free weekly newsletter. Send an email to shortbull2020@yahoo.com if interested in subscribing. It is free!

    Disclaimer:

    The thoughts and opinions in this article, along with all STOCKTALK posts made by Robert Edwards, are my own. I am merely giving my interpretation of market moves as I see them. I am sharing what I am doing in my own trading. Sometimes I am correct, while other times I am wrong. They are not trading recommendations, but just another opinion that one may consider as one does their own due diligence.

    Tags: KMI, CNX
    Jun 27 3:30 PM | Link | Comment!
  • Is Gold Bottoming Or Not?

    In my last gold article written on June 15th, click here, I was looking for a bottom to occur. Well, we got the bottom I was looking for with a positive reaction to the Fed meeting, and even got two closes above $1200. However, we have since rolled over and given back the whole rally and then some. Take a look at the daily chart of August Gold futures:

    We have now fallen all three days this week, and are testing the recent low of $1162.10. It is important for the bulls that we not take out that low. How important is it? Well, Main Street Trading posted an article yesterday that you can read here. It is very important that you read the article. In it, they talk about a 48 month (4 year) commodity cycle whereby the last 3 months of the cycle are weak. August Gold topped in September of 2011, one quarter shy of 4 years. That makes June, July and August 2015, the bearish last three months of the cycle, according to the article.

    When examples were posted, bad things happened if the low scored in week one was taken out. August Gold made a critical low at $1162.10 three weeks ago. We are now in the critical 4th week. Although we have been falling this week, we have still not taken out the low. So far, so good.

    Now looking at the article's examples using copper, soybeans and the S&P, I have some comments to make. First, copper did make a 3rd week high, and in the 4th week, broke down under the 1st week low. However, copper was merely going sideways and nearly broke down during the 2nd and 3rd weeks. In contract, gold has recently bottomed and had a minor uptrend. Now when copper broke the $2.95 support, it fell into the high $2.70s but then corrected out of the hole and spent two weeks testing the $2.95 resistance area again. As expected, what was support became resistance and eventually copper rolled over hard. Still, if gold should follow a similar path of copper, a break of the $1162.10 support level this week, could result in a sharp selloff down to the $1150 level or maybe $1140, but then we should bounce back towards the $1162 level again. If I buy in the $1140s and $1150s, I should be able to easily come out fine if we would come back up to spend a couple weeks testing the $1162 resistance level. I will be watching gold very closely to ensure we don't break below today's low of $1168.10 as well as the $1162.10 level. I will hedge my long gold position if we break down.

    Next, the article gives a similar example in soybeans. July 2015 Soybeans briefly broke the week 1 support during the 3rd week, while also bouncing and making an expected high. Then when it broke down during the expected 4th week, the break was marginal and then 2 1/2 weeks later July 2015 Soybeans was testing the recent highs. If gold follows soybeans I will be a very happy camper! Gold may break down to the $1155 to $1160 level, a marginal new low, only to finally bounce and work higher for 2 1/2 weeks and come within a couple dollars of the $1200 level. I would love for gold to follow what July 2015 Soybeans did!

    Finally we can look at the S&P. Not being a commodity, I would not have included the S&P. Also, the authors did not mark the 46th to 48th months on the chart as the S&P bottomed early which kinda works against their 48 month cycle bottom theory. By the time the S&P got to the 46th month of the down cycle, it had already bottomed and was moving strongly higher. Looking closer it appear that July 2015 Soybeans did not slip down beginning on the 46th month of their bear market. It is not marked on the chart. The authors were again just illustrating an 11 week period where we happened to bottom after 11 weeks.

    Anyway, there is a lot of back and filling going on, with the S&P. Although we were slip sliding away, it was very slow and methodical and the kind of market that my trading method works out the best. I would not be so fortunate to get this kind of a gold market. I am not that lucky!

    Conclusion

    The current gold market hit $1168.10 today but did not violate the $1162.10 level that is critical according to Main Street Trading. But if we should break that support (I don't believe we will) gold should stop at $1160, $1150 or $1140 and then recover nicely back to at least $1162 and possibly all the way back to just under $1200, before falling further in August when the 48 month cycle bottom is due to occur. In any case, although showing some distinct weakness, there is enough of a bid under the market I don't expect to have serious concerns if the $1162.10 support level gives way. On the retest of the $1162.10 level or higher, I can fully recover with ease. In practice I plan to put on a hedge if we break below today's low and especially $1162.10, to help cushion the blow should it occur.

    To follow along as we trade gold and other commodities, join us in our private Short Bull Trading Room on WeChat. Just download the free app on your phone or tablet, and then add "bobed1". You can then send me a message so I can invite you into the room. Still plenty of room.

    Last Saturday I sent out my third issue of my free weekly newsletter. Send an email to shortbull2020@yahoo.com if interested in subscribing. It is free!

    Disclaimer:

    The thoughts and opinions in this article, along with all STOCKTALK posts made by Robert Edwards, are my own. I am merely giving my interpretation of market moves as I see them. I am sharing what I am doing in my own trading. Sometimes I am correct, while other times I am wrong. They are not trading recommendations, but just another opinion that one may consider as one does their own due diligence.

    Jun 24 5:09 PM | Link | Comment!
Full index of posts »
Latest Followers

StockTalks

More »
Posts by Themes
Instablogs are Seeking Alpha's free blogging platform customized for finance, with instant set up and exposure to millions of readers interested in the financial markets. Publish your own instablog in minutes.