It has been three weeks since analysts at The Schork Reportswitched our technical daily bias in the NYMEX liquids to bearish and eleven weeks since we did the same in natural gas. Our confidence in our liquid’s view increased last week, but with QE2 potentially a week away, we can assure you that we are not overconfident. As far as natural gas goes, the market never looked more bearish. Therefore, our confidence here remains high.
We said it a few weeks ago (TSR, October 4, 2010) and we will say it again… we are waiting for the pre-winter rally in natural gas, but we still see no signs of it developing. There is a historical tendency for this market to rally (and peak) in the fourth quarter. Be that as it may, we are a week away from November and the market is closer to $3 than to $4!
Over the last eleven weeks the spot Henry Hub contract for November delivery has close lower in 32 of 55 sessions (58%) with average losers outpacing winners by 2.3 cents per dekatherm, per session. In the process the market has dropped from a high of $4.825 on August 05th to Friday’s $3.290 low print; a peak-to-trough loss of 32% or $15,350 per contract.