Our fund just bought some Natural Gas contracts. Gas prices on NYMEX are down about 25% since they peaked in early June. We got negative sentiment, increased levels of shorts and a possible technical bounce at support from March 2011 bottom. Essentially, this a trade because it is very unprofitable to hold Natural Gas in the long run, due to heavy contango in the futures forward curve.
Natural Gas has little or no correlations to other major assets, which is what I am looking for when going long in the current turmoil. Correlation coefficient with S&P is at 0.1%, with the Treasuries at -0.2%, with the Dollar at 0.0% and with Gold at 0.0%. All in all, this is a trade based on possible squeeze on Natural Gas negativity.
Trade: NYMEX Natural Gas
Opened: 29th of September 2011
Related Link: N/A
Risk: POFC 1.3%
Return: ROR +0% (Still Open)
I have a question ... the "feeling" is based on a survey and is plumbed for you?
ReplyDeleteThanks!!
Tiho:
ReplyDeleteMake a bundle.
Regards,
any thought on wheat?
ReplyDeleteBasically - the lower it goes, the more I will buy!
ReplyDeleteI'm not buying anything just yet, apart from a small scattered trade or two over the last couple of months. But when I start buying, Agriculture will be the first thing I buy. I think it has nest fundamentals and will most likely bottom before equities and other commodities.
Sentiment is getting extremely negative now, including on all Agiculture. As of last Tuesday DSI showed 10% bulls on Wheat. I assume there are now even less optimists. But the story is the same for all grains and softs. If I owned Wheat, I wouldn't sell or short it, I'd think about buying some...
My best advice is to let this panic selling climax and exhaust itself!