Winter of Discontent: Pre-Market Update

Update (9/9/20, 8:11 a.m. EST): UNG, shows pre-market action trading higher, +2.11%, as expected.

Original post (9/8/20):

Natural gas and more specifically, the tracking fund UNG is at its trend line; A trend line that’s been in-effect since July 31st, this year.

The Winter of Discontent post on natural gas, indicated a major long-term reversal.  That analysis was complete with a test location (shown on the chart below).

It’s important to note, the test level was identified thirteen (trading) days in advance.

There was plenty of time to monitor price action, perform additional research and generate a supporting case before the test zone was reached.

UNG subsequently tested that level and never looked back.

Now, UNG has penetrated support (at the 13.00-area) and contacted its July trend line at the same time.

Essentially, in Wyckoff terms, it’s in spring position with the added technical condition of being at trend.  For more on Wyckoff “springs”, see this publication.

This exact point is the ‘danger point’.

If UNG does not immediately bounce higher (at the next session), the trend may be broken and we’re right back into a possible continuation of the bear market that’s been in effect for years.

It should be noted that ‘danger points’ are also the location of lowest risk.  Verification or failure of the move is not far away in either market direction.

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Note:  Posts on this site are for education purposes only.  They provide one firm’s insight on the markets.  Not investment advice.  See additional disclaimer here.

Peabody Energy (BTU) Reversal

Way below the media radar, coal prices are reversing off a four-year low.  Peabody Energy (BTU) is reversing as well.

iStock-166215263-CoalWhy would coal, a supposed dead product be reversing now?

The list could be endless depending on one’s level of awareness.

Here are a couple of potential reasons.

No. 1

Were entering a 400-year solar minimum with decreased sun-spot activity and colder (much colder) earth temperatures.

The natural result of such activity is a decreased earth magnetosphere and increased cosmic ray activity.

Go outside during a sunny day … the sun’s rays are not warm anymore, there hot!  They feel like burning, searing energy on the skin.  The magnetosphere is weak, letting more radiation come in.

Under such conditions (more cosmic rays) volcanic activity picks up big time.  Scientists (those still honest) have not been able to figure this one out.  It just is.

So, we’re one major eruption away from the entire earth being covered with an ash cloud.  Bye, bye solar … instantly.

No. 2

Natural gas prices are rising dramatically.  Remember the Winter of Discontent update?  That update was spot-on.  It also included the level UNG could retrace (which it did) as a test, before moving higher.

UNG is up over 44%, from those levels.  One of many (now false) ideas for natural gas, was that it’s cheap.  Not any more.

Just two potential reasons for a coal reversal at this point.  Those with advance knowledge may be taking positions.  We see it in the price action.

As always, anything can happen and coal could resume a downward trajectory.  However, if BTU is able to hold above the 2.50-level, it may have already seen its all-time lows.

Keep in mind with BTU, we’re dealing with an equity in serious trouble.  It’s not hyperbole to say, the only thing that could save this company is a major reversal in coal prices.

2020-08-28_12-05-35-BTU-Daily-4-bar-landscape-notes

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Note:  Posts on this site are for education purposes only.  They provide one firm’s insight on the markets.  Not investment advice.  See additional disclaimer here.