Natural gas markets exploded to the upside on Thursday, breaking above the $2.85 level handily. As a record this, we are close to the $2.92 level, and showing signs of running out of steam. We are overbought on the hourly chart stochastic oscillator, and crossing. Because of this, I am getting ready to start shorting this market, but I would probably wait until we dropped below the $2.90 level at the very least. After all, it’s a very thin marketplace, so it’s likely that the move might have been overextended and a bit overdone. I think in the thin marketplace, you can only read so much into this move, and quite frankly I think the fact that the market has reacted this way gives us a bit of an opportunity as they are going to be as likely to be mispriced as any other time. I think that the market moving down towards the $2.75 level is a very real possibility. If we do continue to go higher, I’m waiting for the market to go looking towards the $3.10 level to start selling again. I have no interest in buying natural gas, every time I do I end up getting burned.
I believe that the selling of natural gas during what would normally be bullish time of year tells me everything I need to know, and at this point I’m just waiting for the market to tell me to short the market again.