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Page added on December 21, 2013
Natural gas spread exploding
Gross domestic product climbed at a 4.1% annualized rate, the strongest since the final three months of 2011 and up from a previous estimate of 3.6%, Commerce Department figures showed this morning. The Chicago Board Options Exchange Volatility Index (VIX) dropped 6.4% today to 13.25. “If we’re making progress in terms of inflation and continued job gains, then I imagine we’ll continue to do, probably at each meeting, a measured reduction” in purchases, Bernanke said, calling $10 billion in the “general range” for a “modest” reduction. If the economy slows, the Fed may “skip a meeting or two,” and if the economy accelerates it may taper a “bit faster.”
Equities: The MAR14 E-mini S&P 500 (CME:ESH14) is up 11.75 points today to 1813.75. 1819.50 is our next technical target from our market profile analysis, with 1811 as the key pivot level. We believe this is a bull market, and has a potential to head to 1819.50 and possibly higher after that. With a positive GDP reading, the stock market seems to feel more and more comfortable trending higher due to underlying strength in the economy. We believe another 25% year in 2014 is unlikely due to the winding down of the Fed’s stimulus policies.
Bonds: The MAR14 U.S. 30-year bond market (CBOT:ZBH14) is up 20 ticks to 129’26. The MAR14 US10yr note is up 6 ticks to 123’27. We believe January could be a very bearish month for bonds, especially if we see a good jobs number on the first Friday of January. Our favorite taper trade in the interest rate markets is the Eurodollar JUN15/JUN16 spread. We think this spread will keep trending higher as the later month may go down faster/more than the earlier month.
Currencies: The MAR14 USD (NYBOT:DXH14) is down 9.5 ticks to 80.695 after hitting a key 81 level this morning. We still believe that the USD index has potential to trend higher in Q12014, possibly completing a technical pattern to 82.60. The MAR14 Aussie dollar has had a good rally this morning, up 72 ticks to 88.77, while the MAR14 Pound is down 24 ticks to 163.40. The MAR14 Swissie is up 49 ticks to 111.87. 112.25 is our next key resistance level.
Commodities: MAR14 coffee (NYBOT:KCH14) has jumped up over 2 cents today to $1.1590. We believe coffee could approach $1.20 very soon. FEB14 gold (COMEX:GCG14) dipped below $1200 yesterday, but is making a small recovery today to $1204. We believe the $1,100-$1,200 range will serve as the base for gold. We are watching the MAR14 (NYMEX:NGH14)/JUN14 (NYMEX:NGM13) Natural gas spread, which has recently exploded to 295. We believe this may be approaching overbought levels, and our next resistance area for this spread is around 340. JAN14 RBOB (COMEX:HGH14) continues its strength, trading up $.0336 to $277.37. We still believe copper is headed higher to at least $3.35, this pertains to the MAR14 contract.
6 Comments on "Natural gas spread exploding"
Makati1 on Sat, 21st Dec 2013 3:27 pm
Dream on….
J-Gav on Sat, 21st Dec 2013 4:12 pm
The Fed’s out of ammo and pretends it’s still in control. Suckers believe them when they spout this crap and since they can manipulate all the capital markets, they’ll get away with it for a while longer … then a day of reckoning will come.
Stilgar on Sat, 21st Dec 2013 8:41 pm
The wording the Fed uses makes it sound like QE is permanently the go to policy if certain economic criteria are considered insufficient. Not happy with economic data, print money. It’s simple, but what are the long term repercussions and implications of such a radical strategy? Oh that’s right, the implied goal in a world with dropping EROEI, is to postpone the inevitable non-growth economy as long as possible.
Bob Inget on Sat, 21st Dec 2013 9:25 pm
If youse guys don’t recognize return of cleaner, affordable, natural gas is offering our planet one more chance to
build out renewables that one day could replace all fossil fuels, then you are in a sense, deniers.
There is every indication AGW deniers,
quick buck Wall Streeters, ‘End Timers’ will blow this last opportunity exporting finite gas for quick profit.
Last thing we need is to fight over scraps.
Makati1 on Sun, 22nd Dec 2013 1:24 am
If you don’t see the world war in the news it is because you are not looking. Every western nation is bankrupt. The wizard’s curtain is getting thin and the governments need a distraction big enough to put the collapse blame on someone else.
All of the nations are placing their pieces:
China’s new controlled fly zone (I expect one in the South China Sea soon),
Japan rearming,
Russia moving missiles on Europe’s border,
Russia developing new truck and track missile launchers,
ditto for the Chinese,
ever closer monitoring of each other’s military activities,
new military satellites from many countries,
ever more desperate measures to keep the dollar, Euro, and Yen alive,
and on and on… Are you prepared?
rollin on Sun, 22nd Dec 2013 3:30 pm
The “growth” is still well below real inflation, so it is still decline.
It’s not what happens but how we handle it that counts. With all this disinformation being spread and people still concentrating on profit instead of healthy change, there is no way to move to a survivable position.
If people think that money will save them, they should think longer.