With the peak demand period for heating behind us, we generally get some moves lower in NG and HO around this time of year.
I’ve been short a couple of NG spreads that have been trading very nicely so far.
On Monday front month NG hit a new low and on the surface it appears that demand has fallen away as we might expect this time of year.
Not so for the spreads though.
Over the last few sessions spreads have turned around. When this happens it can sometimes indicate a turnaround is coming in the outrights and this can blow out the spreads even further.
As a result I might tighten my stops a touch and I’ll let them play out for the next week or so and see how the spreads continue to trade.
NG N5 – NG U5
For the technical analysts out there, that does look a bit like a double bottom and it feels like they want to push higher. However for now I’ll stick to my plan and stay short.
Even though the weather seems to be in line with expectations at the moment, any deviation in storage numbers on Thursday might be the catalyst for a big retrace.