BlackRock's Russ Koesterich explains why the S&P 500 will continue to trade sideways until the economy and earnings picture improve.» Read More
It's called "the widow maker" for a reason.
Natural gas futures for March delivery fell some 8 percent on Tuesday, after an extremely volatile Monday session that saw the commodity lose 17 percent in eight hours.
These two days of serious losses came after a gut-wrenching rally that saw nat gas rise from $4.81 per million British thermal units to above $6 in four sessions.
But even as the March futures plunged on Tuesday, the April futures clung onto a modest gain for much of the session. This is because the March contract expires Wednesday, so even as traders rushed to exit positions, some looked to the April contract as they continued to make bullish bets on the fuel.
For traders who speculate on the futures of natural gas or any other commodity, it is imperative to exit a long position in order to avoid receiving the physical commodity (or "taking delivery").
"Rather than just bailing out of their longs in March, [some traders] still have faith that this market's going higher, so what they're doing is selling March, buying April," said Anthony Grisanti of GRZ Energy on Tuesday's episode of "Futures Now." "So that's why you see the March contract lower today, and the April contract up a bit, because the money is still flowing to natural gas right now, looking for higher numbers."
Indeed, while about 60,000 March contracts traded on Tuesday, some 175,000 of the April contracts traded.
Yet while the contract rollover explains the move, it doesn't quite explain its magnitude.
"This volatility is unprecedented for this market," Grisanti said. "This is completely abnormal for these markets. Usually you'll see 3-, 4-, 5-cent—not a $1.50 move, which is what we've seen."
(Read more: Natural gas could rise to $8: Energy expert)
As the last of the fourth quarter earnings trickle in, the S&P 500's earnings growth rate for the quarter looks strong, at 8.5 percent. What's weird is what analysts are predicting for earnings growth in 2014.
In an outlook that could only be described as disjointed, analysts are expecting earnings growth to dive to 0.9 percent in the first quarter, only to grow to 11.9 percent in the third quarter.
It's been a banner week for natural gas. Hitting $6.40 per million BTUs on Thursday, the commodity has risen more than 30 percent in eight trading sessions, up to a five-year high. But expert energy trader Rob Raymond says we may not have seen the top just yet.
"With sustained cold, you could see $7 or $8," said Raymond, the founder and principal of RCH Energy, on Thursday's episode of "Futures Now." "This is about rationing demand. Because basically, you're running out of molecules, and at some point, if the supply side can't react in a 15-to-30-day period, you've got to bid it up to cause people to consume less of it."
Natural gas tends to rise in the winter and the summer, because it is used for both heating and cooling. The problem is that logistical difficulties make it difficult for the market to adjust to highly unusual weather.
"We had the coldest winter in 100 years this year and had the warmest winter in 50 years in 2012," Raymond wrote to CNBC.com. "The system isn't designed to handle these sort of multiple standard deviation events from an inventory management standpoint, as there isn't enough storage capacity in the ground. This translates into lots of volatility in the short term."
New developments have made the problem even worse.
"Further exacerbating the issue is that we have moved 20 percent of US daily supply to a very cold part of the country in the winter, the northeast. So when it gets really cold, the supply side is now affected due to well freeze-offs," Raymond wrote.
(Read more: Low on natural gas, California told to power down)
MacNeil Curry, the head of global technical strategy at Bank of America Merrill Lynch, says that historic highs in the stock market are just around the corner.
"For all-time highs in the S&P it's probably not that far away—I'd say probably a couple of weeks on the outside," Curry said on Tuesday's episode of "Futures Now." "Seasonals start to get much more constructive once we get past February and we're already almost through February, we've got a week and a half. So I'd say probably two weeks or so with regard to higher S&P."
The index's current all-time intraday high is 1,850.84, which it touched on Jan. 15. (The S&P also made its all-time closing high, 1,848.38, on the same day.) With the S&P currently trading at 1,841, those levels are just a hair's breadth away.
Yet Curry was bearish on the S&P 500 until Friday, when the market's strength told him he was wrong.
"We were pretty bearish a couple of weeks ago for a whole host of reasons," including market breadth, the price action from the 1,850 high and seasonal trends, he said.
"But the fact of the matter is the price action said we were wrong. We broke through some pretty decent resistance. ... It said to us that our analysis was wrong and that the correction had run its course, and that the larger uptrend had proven to be far more resilient than we anticipated," Curry said.
(Read more: BAML's top technician: I was wrong—buy stocks!)
The Federal Reserve is set to release the minutes from its January FOMC meeting on Wednesday, and market participants are sure to closely sift through them for any clues about the future of quantitative easing.
"The minutes are going to be important, and there's always some morsel that people tend to gravitate toward," said Deutsche Bank's chief US economist, Joseph Lavorgna. "My guess is that in these minutes, it will relate to the outlook."
For any group that relies on economic data to determine its next move, this is a difficult time. Two straight employment reports have shown markedly weak gains in nonfarm payrolls (113,000 in January and a marginally adjusted 75,000 in December) but the extent to which bad weather adversely impacted those numbers is being rigorously debated.
New Fed Chair Janet Yellen, for one, told the House Committee on Financial Services on Tuesday that she was "surprised by the weak jobs reports in December and January, but we have to be careful not to jump to conclusions when interpreting what those reports mean—there were weather factors—we've had unseasonably cold temperatures that may be affecting economic activity in the jobs market and elsewhere. The Committee will meet in March. We will have a broad range of data on the economy to look at, including another jobs report."
However, LaVorgna points out that the February employment report could also be marred by weather conditions, given that last week's massive storm came on a survey week for the report.
Ironically, the storm even caused the Senate Banking Committee to postpone the second day of Yellen's congressional testimony, which had been planned for Thursday.
(Read more: U.S. Senate postpones Yellen hearing as snow nears)
You could call it a valentine to the market.
MacNeil Curry, the head of global technical strategy at Bank of America Merrill Lynch, was bearish on the S&P 500 going into 2014. But now he says it's time to buy.
"Up until yesterday we had been bearish risk assets and the S&P 500," Curry said in a Friday note. "Yesterday's close above 1,823 says that view is WRONG and that the larger uptrend has resumed," he wrote.
The technician now holds that the recent strength in the S&P 500 "should project further upside for a test of the highs at 1,850—and perhaps on up to the long-term channel at 1,872."
What persuaded him to get bullish is the recent strength in the S&P, which has bounced nearly 6 percent off its lows Feb. 5.
"The setup was pretty bearish, frankly," Curry told CNBC.com. "We had the impulse of decline from the highs of 1,850, fairly negative seasonals, and a pretty sharp deterioration of breath. With all of that, I was pretty confident we would head lower and probably take a run at 1,711. ... That we've then reversed as hard as we have and started to trade quite bullishly says I'm wrong."
Earlier this week, he told CNBC.com that he noticed "breadth deterioration" in the market, "which is often what you see in a correction." He went on to note, however, that "if we close above 1,823, then things start to get more constructive."
The rebound "was really frustrating," he said. "But this is the nature of the biz. You get everything aligned and you take your shot. And you figure out where you're wrong when you're wrong, and move on."
(Read more: Byron Wien expects 20 percent gain for S&P 500)
Gold futures rose above $1,300 per troy ounce Thursday, breaching the round-number level for the first time since early November. And some traders say the precious metal still has a good deal of upside potential left.
"When you look at gold, it's been all about the technicals," said Brian Stutland of the Stutland Volatility Group. "As soon as we broke above $1,275 basically, it's been a straight push to $1,300. I think it continues—I'm looking around that $1,320, $1,340 level where gold could probably trade. The technical are just too strong behind it."
Like many traders, Stutland is watching closely for gold to reach its 200-day moving average, which falls at $1,308.
"I think it's a given that we hit that either today or at least next week here," he said on Thursday's episode of "Futures Now."
Gold is enjoying a great start to 2014, hitting a three-month high on Tuesday as it notches its first five-day win streak since August. But Credit Suisse's gold expert cautions against overstating the significance of the move.
In fact, he says that if the economy gets through its recent "soggy patch," gold could fall all the way to $1,000 this year.
"The fund flows that we've seen so far this year have been more short covering than new money coming in and adding to longs," said Credit Suisse's head of precious metals research, Tom Kendall, on Tuesday's episode of "Futures Now."
"I wouldn't be surprised if we see it trade up a little bit above $1,300 in the next couple of sessions," but "I think the momentum that we're seeing here is probably looking to exhaust itself in the not-too-distant future."
(Read more: Gold ends near 3-month high after Yellen remarks)
Kendall says it's about to get much, much worse for the precious metal.
"I think it's realistic to think of gold having a test of the $1,000 level at some point this year," Kendall said. "Now that's going to take well into the second half of the year, perhaps right toward the back end of Q4, before we can start thinking of gold going down to that kind of area. But that's not out of the realm of possibility by any stretch of the imagination, particularly once we get through this soft patch in the U.S. economy and we see real interest rates tick back up."
The immediate reaction in the futures market to the January unemployment report could only be described as confounding.
Within seconds of the report's release at 8:30 a.m. EST Friday, the S&P 500 e-mini futures promptly rose from 1,774 to 1,786, then dropped to 1,760. That represents a 1.5 percent market move, high to low, made in about 10 seconds.
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