Without a doubt, the Natural Charts charts have some of the wildest moves I have ever seen or tried to count out.
Commercials are net short NG, while the speculators see a very bullish picture. That doesn’t mean NG is going to soar in price, but the winter is coming soon and it could be much colder than normal.
The world is freaking out about climate change which has more to do with the sun and its solar cycles then any CO2 built up in our atmosphere. The war on coal or fossil fuels continues as many electricity generating plants are switching over to NG.
Natural gas may have to break to new record lows before we see a substantial rally.
There is no way of seeing supply numbers as they just flare off any extra NG that they don’t need, besides that, they flare for safety reasons. When the flare rate increases then we know a natural gas glut is already here!
It may take the rest of the year but I’m sure solar cycle 24 is drawing NG prices down.
Without a doubt, natural gas belongs in the diagonal family of patterns. Commodities that I cover all have diagonal wave structures and this has been true since the Little Ice Age ended. (Wave II in Supercycle degree) When SC degree wave II ended is debatable but the majority of scientists say 1850 is when the climate changed.
In modern times we have more NG available to us than at any time in our history. Fracking made the difference and soon “Electric Fracking”, will become popular.
Trying to work out natural gas supply and demand is a futile effort because once the demand for NG slows they just vent or burn off excess inventory.
They figure that 1/3 of all Natural gas is burned off like this. The more supply they have the higher the flaring rate becomes. Northern Canada is also home to flaring off excess inventory which most satellite systems can measure.
Since the 1984 peak NG prices switched patterns as before 1984 the massive bull market was pretty smooth but soon after that, the NG price patterns changed dramatically.
This is very normal and happens at all degree scales that I use. Gold was also a big zigzag bull market but a 20-year bear market kept us scratching our heads.
The “C” wave came to an end in 2005 and a new bearish phase has started that is still running 14 years later. The NG bear market is still not finished as a new record low should still get established in the next few years.
The slow and steady decline of solar cycle 24 is drawing NG prices down until solar cycle 25 cranks up. The sun and its cycles have a huge impact on NG prices and that is about as fundamental as we can get, yet the majority all ignore solar cycle fundamentals.
I’ve made a few changes to my Wave count but the chances of the bullish phase that started in 2016 could be a false bull market or bear market rally. To help confirm that, Natural Gas charts must retrace the “Entire” bullish phase. The $2.50 price level would be normal support but that has a slim chance of holding.
Gaps opened up but were also closed pretty quick. At the $3.00 price level, we have another open gap that would get closed on a potential 4 wave rally in Minor degree.
Commercials hedgers are still net short and I would like to see them switch before I turn bullish on NG again. You would figure due to the Great Arctic Vortex, natural gas price would be soaring? In 2014 Natural Gas matched the secondary peak of solar cycle #24, after which it resumed its bearish move. NG also repelled from the 2011 solar cycle peak. A few more years to go, as the start of solar cycle #25 would work like a magnet, drawing prices to it. Once solar cycle #25 starts, natural gas prices could be propelled to the upside for years.
The Arctic Vortex has nothing to do with the amount of CO2 in our atmosphere because the amount of CO2 forcing (leverage) has no numbers they can measure.
Yes, we could end up with another little ice age, and the alarmists will still be calling it global warming. Low sunspot activity is a most likely cause of the Vortex.
This chart of the solar cycle decline includes the January numbers where we can see sunspot activity has increased. 61% of 2018 was spotless, which may not yet be a record. The record low spot count for 2008 was 73% which may get hit again.
I’m expecting solar cycle #24 to come to an end, and many good science sites will report and track the turning which may be a few years away.
Due to some downtime of this blog this I have just started posting. I would say the NG crash we’ve had so far was pretty impressive! If I’m right we could be looking at a 5 wave run in Intermediate degree. Once I looked at it from a triangle perspective then, Natural Gas should see one more bear market low. The 200-day MA repelled the price of NG with little effort. Sure the “E” wave can fool us by still producing a fairly obvious correction. When NG hits the middle trend line then all support has failed already. I think NG cycles get attracted to0 or repelled by the solar cycles. This could be a nice setup for solar cycle #25 propelling the price of NG north again. Commercial hedgers sure don’t see the bullish side of this story as they still have net short positions.
It’s still going to be a wild ride as any winter freeze scare could send NG flying. This can happen in the month of February which at times has been the coldest month of the year. The world economic activity is slowing down and a prime example is the iPhone sales slowdown in China and other countries.
This is the January 2019 NG weekly chart and it looks nothing like the daily chart. For the last month, Natural Gas Prices were correcting after which NG prices exploded. This morning NG prices exploded again, so chances are good a small 4th wave has developed. An NG rally going into the winter/spring season is not all that strange. There is an open gap open below, which could get filled at a later date. For now, one more push to the upside would be nice. There is an LNG terminal planned in BC, and I think that is a good thing. Still, there are seasonal changes that affect the NG prices which can still drive the prices a bit higher.
I would be very bullish longer term if the commercial hedgers were net long instead of net short. They are far from being net long, which does not support a huge impending bull run at this time. NG sure is not on a 5 wave impulse run as the angle of the 2018 move has been too fast and straight. Natural Gas prices are also diagonal wave structures so you can always expect a wild ride when you least expect them.
The vertical move in the last day or so cannot be maintained as past historic spikes have obviously confirmed. I understand a cold spell may have set this off, but what else is new. It’s the vertical move that could be the end of a run and not the beginning.
I also have an “A” wave peak in Intermediate degree but I have other choices as well. This bullish phase has been running since 2016, and since looks like an inverted zigzag I have look at it like’s a bear market rally as well. If this is a bear market rally, then a complete retracement of this NG bullish phase.
We’ve had three bear market rallies which all were completely retraced, so who says we can’t get the 5th bottom?
With my “A” wave peak then chances are good no new record low will happen but a good corrective wave has to form to convince me otherwise. Natural Gas is another prime example of diagonal wave structures, as there is nothing but overlapping wave structures everywhere.
For a correction, NG could drop well below the “B” wave bottom I show, and it would take time to play out. FOMO is also always part of any move, but so is fear of losing.
The commercial traders are short Natural Gas, but not by that much. My Market Vane report this week showed about 77% bullish which is pretty high, but may not go to an extreme. Anything above 90% bulls, we are entering the extreme side of prices after which they can implode.
The 2005 peak is about as close to Cycle degree wave 3 that I can get. What followed surely looks like an impulse but it belongs to the diagonal world. With winter coming on, it would be futile, or a waste of time to chase any bearish outlook at this time.
A quick look at the COT reports, the commercial hedgers are net long while the speculators are still net short.
Both groups can’t be right, and I know that the speculators are the trend chasers, who still see a bearish decline coming.
This is also where the falling wedge looks pretty obvious if know some basic technical analysis. Experts can spew all the fundamental rhetoric they want but when they know nothing about falling wedges and the major bullish phase that they can produce, they will be wrong every time!
Fundamentals will always tell us the wrong things at the extremes, as markets always do the opposite of what the fundamental, indicators and analysts forecast.
The wedge is holding NG prices down for now, but keep an eye open for a breakout that we could still get this year.
Natural gas is another one of these asset classes that belong in the diagoanl world as it’s entire life seems to be diagoanl wave structures. So far the 2016 bottom is an 18 year bottom as well. I think there is a bigger bullish phase in progress, but our present move needs to clear up some more in the short term. Commercial traders are long NG but not by any extreme. Short term NG can still give us bearish signals but I think a bigger bullish phase is still due.
I labeled a wave 3-4-5 in Intermediate degree, but this could be one degree too high at this time. Our present rally seems to be crashing or correcting. I see it as a potential correction of the flat variety. We are about as close to a running flat as we can be, but it sure would look better with a bit more downside. A Flat inside a zigzag always works for me which would end up giving us a summer rally as air conditioners crank up for the summer months.
Commercial traders are net long Natural Gas, not by very much, but it helps to make a bullish case for a summer rally. This is a weekly chart and switching to any smaller scale distorts the charts so much it’s impossible to show a decent wave count. One thing is certain and that is that Natural Gas is another one of those charts that show some pretty wild diagonal wave structures. It would not surprise me if this zigzag was part of a triangle “D” wave, so if this is true, then we should see some very bullish NG news headlines in our future.
For those wave analysts that think that diagonal waves don’t exist, then by all means try finding some clean impulse waves in this Natural Gas chart (NG). You might see some very small degree impulse waves, but overall most all waves overlap each other at critical locations. I have created an expanded pattern followed by 5 waves that will not work as impulse waves, so we have diagonals waves as our real choice.
I think Natural Gas is going down in another correction after which NG could soar to another new high. The best scenario would be that a diagonal decline has completed and we end up getting a 5 wave run in Minor degree. This single correction could still keep falling to the 61% retracement, after which it can crank up again.
At one time I read that they want to rename NG as Methane! Once they do that then they can call NG a greenhouse gas, and tax it out of existence. They don’t like it when they call a fossil fuel “Natural”! Global cooling would change all that as demand would pick up everywhere.
Only time will help give us more clues, but if the bullish scenario dominates, then NG must not crash to new record lows.
Natural Gas has exploded from another major bottom, but it started with no clean impulse waves, except for very small degree levels. This gives me a clue that Natural Gas can be in a big fake bull market, or possibly a “Primary degree “B” wave bull market.
The recent decline sure looks like another zigzag in the completing stages, and if this is true, then NG should blast much higher again. Besides closing all the open gaps on the decline, NG also has a big open gap well above present prices. This gap should get close. I don’t have the time to keep very detailed intraday wave counts on NG, so every wave position will be a best case scenario. It takes a very long time to build a decent wave count on anything and Natural Gas has mostly diagonal wave structures in it, going back to the 1980’s.
Natural gas is another good example how climate change can affect commodity prices. It affects the people who are trading in the commodity. This is not rocket science when record breaking cold spells has gripped most of North America at this time. The coldest month of the year usally happens in January so I could see NG still performing strong until then, or until the next warm spell.
America will have big problems in meeting electricity production in the next few decades as Obama has killed off all the coal fired plants at the same time that present nuclear plants become obsolete or worn out. In a desperate move to crush Trump before he gets going, Obama has stopped offshore drilling in Alaska and the Atlantic.
All this when we have the potential to drift back into global cooling for the next two solar cycles. I’m a great believer that Thorium can make up the slack in record time as Thorium is plentiful and is a waste byproduct of rare earth mining.
I would like to cover many more commodities to my my wave counts, but that is impossible as my time were stretched already. I probably post more during the day than any other single wave analysts does, and the more I do, the more the quality can suffer. When I did look at this NG chart I saw what looks like a great starting impulse wave, that I would not want to call a top unless I saw a pretty good looking spike being added on, in the daily or this weekly chart. Even then, with the start of an impulse NG could still add on another few legs to this move.
About 8 years from the “B” wave top gives it a nice Fibonacci ring to it, but if we are heading up to another “D” wave in primary degree, then we should see a wild “B” wave correction in Intermediate degree. If the 2016 bottom ended on a “C” wave, then there is a very good chance the entire decline will get retraced as that is what happens after “ABC” crashes. Of course in a triangle this may not happen every time, but they eventually get retraced by the following bull market.
At a minimum NG should cross the Intermediate degree (B) wave top.
It has been some time since I last looked at the Natural Gas chart. On March 7th, 2016 it made what I call a major bottom. NG now matches the 1999 bottom prices, so this qualifies as a major bottom in my books. If you want a horror (good Practice) in counting Elliott Waves then NG is the one to pick on, as I would have to call it as a diagonal wave counting heaven.
Reviewing this with diagonal eye glasses on we can try many different wave counts were overlapping waves is the norm. Don’t even try to look at NG with impulse waves etched into our brains, we would be wrong every time.
As you may have guessed I can not stress it enough times, but very many of the markets are all traveling in diagoanls waves. NG has a very good chance of ending in a diagonal wave 4 in Primary degree.
If my above flat is true, then we should see NG travel to all time new record highs, even if it does so by the slimmest of margins. After which another bear market would develop. I’m still well below Cycle degree with this wave count, which would make Cycle degree wave 3 still ahead of us time wise.
My “B” wave top in Intermediate degree, should get retraced and any decline trend line would also get stabbed once NG picks up steam. From a glut to a shortage in a very short time, as storage levels are getting low. With many rigs shut down, gas production is also imploding. California may suffer rolling blackouts, so until all the rigs are up and running again, it may take some time to clear up.
The fundamentals will take care of themselves as they are always lagging the price moves.
I mentioned in the past that NG still had to fall below that $2 range. It most certainly did this, but now what? NG does not run on your average looking impulse as its biggest bear market looks more like a diagonal decline, but with an expanded pattern in the 4th wave position. Will this low of $1.85 hold? Futures Natural Gas charts are horrible to display, as they will not work on the cash basis as there is not enough volume to display. Needless to say I have never been able to keep a detailed wave count on NG itself, and I don’t review it very often. It’s not at the top of my list.
Eventually we should see an NG breakout over those $6.0 peaks. With drilling rig counts crashed, I can see a squeeze in energy prices, as electricity production will be more in demand. How else do you think we can keep all those Tesla electric cars on the road? Solar Power is not going to do it! They may even have to bring coal back online, even though Obama tried to kill coal off.