I only learned much of what you wrote yesterday. I know you'll laugh at me but I wasn't joking when I said I buy on the technicals and perhaps later I'll look up the macrofundamentals.
To add to your information, I also found that the speculation seems to center around the carbon tax story.
First, remember the uranium story 4 years ago. Stories flooded the market with how nuclear power plants were going to be built basically every week, nevermind the fact it takes about a decade to build one. What happened? The fuel, uranium, even at reasonable inventories back then started a moonshot in the frenzied speculation. Uranium and the companies that mine them exploded.
Jump to today. The carbon tax represents $700 billion in potential revenue for the government and businesses will supposedly have no choice but to take the tax incentive to reduce their carbon blue print. Most of the electicity generating utilities in the USA are Coal fired. Coal produces 50% to 70% more carbon emissions than Nat Gas burning.
Yesterday a report came out that said the USA reserves of Nat GAs increased 35% based on what was previously known. The increase was due to improvements in Shale stone extraction technologies. Now, when the news broke, it didn't cause Nat Gas prices to fall, in fact, they rose. What would make it rise, when the world has just learned there is even more supply around?? I think its speculation that indicates this was, but even more so now after yesteday's report, a true alternative to goal fired plants.
Interestingly when tne inventories of 116 bcf were released, this caused a fall in prices. Why? As you pointed out inventories have been building at significant rates over the last year, so why fall on this build? Also interestingly, it didn't fall enough to negate the buy signal that was generated a few days ago, its still in the bull channel.
To wrap it up, I think the same thing that happened with uranium is being speculated upon with Nat Gas. It is the future and the USA has abundant amounts of it as fuel to generate its electricity needs for decades to come at 50% to 70% less emissions.
I'm still in and will likely average in more if it doesn't break down, but there's definately something going on and the trick is to get in with the big speculators before the ride starts.
Couple thoughts on breaking news and price reaction. That news release yesterday about increased reserves, I don’t think it is “new” news. Just more noise. Shale and it’s potential have been known for awhile, and I am sure I have heard this news item discussed many times in the last few months. As far as a price reaction to the inventory build numbers, again this problem appears to me to already be priced in and is very well known by the market, been going on for weeks. Watching natty the past few months has been quite an education for me. I really have to laugh at what a joke this casino we call the market is. Each thurs. in my trading platform screen I put up the 1 minute chart for UNG and watch the clock on the trading screen which must be accurate to the second. At exactly 10:30:01 the price goes beserk. Now if the report is released at exactly 10:30, how does anyone have the ability to read it and hit the buy/sell button in less than one second. It is really hilarious and fun to watch. Natty appears to me to be a classic case of the wall street corruption game. I am just trying to watch and learn how the game is played. For sure, logic and rational thinking don’t seem to be the key to success.
Finally getting a sunny day here in the wild west, and SLW is up, yeehaw. Don’t ever remember this much rain in June in Utah. Enjoy your weekend!
You know Ballhead, I'm going to have to concede to your knowledge base here because again, I just started reading about this stuff yesterday.
You're bang on about this joke of a casino we call investing. I've been laughing for years because much of the micro fundamentals are just noise.
What I've learned about news releases such as the inventory numbers is that the information is sometimes released to the press before the specific time, in this case 10:30. The press is expressely forbidden from sharing the info before the said time. They are able to go through the information, summerize it quickly, and on the floor of the NYSE or other exchanges, the ticker will flash at the precise time indicating up or down on what ever the reading was supposed to be and those people watching just press the lever. Then there's the cascade reaction from black boxes just reacting.
I'm actually learning too about Natty and crude, its interesting, their movements are locked into the price tickers of contracts representing them.
It will be raining here all weekend so, have some fun for me. chemaes