Gold dove on the jobs report, then soared. Here's the surprising reason why.» Read More
As we find ourselves deep into the winter, it is becoming increasingly clear that we are not getting the cold weather and the demand that comes with it to push natural gas higher.
(Read More: Nat Gas Rally About to Deflate: Pros)
That is why for the Feb contract I am a seller, we could see a 2 dollar handle when Feb expires on Jan 29th.
(Read More: Natural Gas Could Be Bigger Than the Internet: Welch)
Here are the facts behind the reasoning, Last week on "Futures Now" I said I thought natural Gas which was trading at 318 would get back to the 332 area, well it went to 335 and then failed miserably.
We just went through the warmest summer on record and natural gas never rose above the 350 level. The outlook for temperature in the northeast for the next 3 weeks is projected to be above average, the demand in this moderate winter won't match the summers, in fact in the last two months, supplies have risen from 8 percent higher year on year to 13 percent higher.
(Read More: Iuorio: What You'll Want to Own in 2013)
Natural gas is not affected by geo politics, it is a domestic market, we cannot export at this time significant amounts, so whatever is produced, and its more every day, stays here. That is why from now till the end of the month I am a seller of rallies in natural gas, if it rises to 330 -335 sell it. and look for 285.
Although gold on Tuesday clawed back above $1,650 an ounce, some professional traders are concerned that the precious metal's steep correction may not be over yet.
As 2012 came to a finish, gold barely managed to stretch its bull market rally into a 12th year. Still, some bulls are beginning to sweat over bullion's overall trend.
Last week, crude prices were helped by a drop in supply numbers, which added fuel to a dramatic five-week rally that increased prices by 8%. We will get new supply data today, and it seems to me that the market has baked in numbers that will support prices. The risk thus appears to be to the downside.
I believe that U.S. equity markets will do well in 2013 because of a few significant tailwinds.
The important one is the resurgence of the U.S. housing sector. Buoyant real estate prices should provide a decent lift to both the employment picture and to consumer confidence. (Read More: Pending Home Sales Rise 1.7 Percent, Beating Forecast.)
Additionally, positive developments in China and Japan could also provide fuel to the "risk-on" trade.
In addition to stocks, I also like gold and silver. These are inflation hedges, which is useful in light of a global central bank mentality of using accommodation as the first line of defense against a slowing economy. (Read More: Gold Steady Amid US Fiscal Drama.)
These developments should also support both crude and copper prices in the new year. I also expect the Canadian dollar to fare well in a commodity-driven risk trade.
At some point in the next few years, the U.S. runs a very real risk of having markets lose confidence in our ability to pay our bills, and this could cause an enormous sell-off in long-term treasuries. It's unfortunate that the timing of this occurrence will be very difficult to predict. Because of this, I will look at very cheap option strategies that will protect against sharp moves in long-end treasuries.
Buy the dips and sell the rips: Equities are seeing a slight pullback from the highs this morning.
On Friday's encouraging jobs data, the S&P was able to trade to its highest level since 2007. The market is currently trading at 1455, as it consolidated above the midpoint of the range since the year began.
Gold eased on Thursday from the prior session's two-week peak as the dollar strengthened and oil prices fell, with investors focusing on coming U.S. budget talks after euphoria over a vote to avert a fiscal crisis faded.
After a 5% up move in the S&P futures over the last two trading days, it's difficult for me to buy in at these levels. I believe a temporary pullback is likely, and would in fact be a healthful way for the market to set up for a more sustained move higher. I expect the pullback to take the market back into the 1426 area, which would fills a gap on a daily chart, and should attract buyers.
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